Congress Shouldn’t Turn West Virginia Into New York
Now more than ever, West Virginia needs jobs, not another ill-fated Washington policy that will take them away.
As a life-long West Virginian, I am deeply invested in building a bright future for our state. My organization, The Cardinal Institute, was founded with a mission to promote economic freedoms that allow West Virginians to thrive. A federally mandated $15 minimum wage will do the opposite — taking away essential job opportunities and earnings as employees and businesses are still reeling from the effects of the pandemic.
In March, Sen. Bernie Sanders introduced the Raise the Wage Act — a proposal that would jump the minimum wage to $15 per hour nationwide for all employees. Sens. Joe Manchin and Shelley Moore Capito voted against it the first time, but Democrats are vowing to bring it back to a vote.
West Virginia’s minimum and tipped wages are both higher than the current federal standard, and additional increases would have drastic effects for workers as they are struggling to recover from pandemic-era losses. By April 2020, West Virginia lost 44 percent of jobs in the Accommodation and Food Services industry, which is still below pre-pandemic employment levels. Economists from Miami and Trinity universities estimated that enacting the Raise the Wage Act would result in another 12,331 jobs lost in West Virginia.
One of the most harmful pieces of the Raise the Wage Act is its provision that would eliminate the federal tip credit, and set the minimum wage for restaurant employees who earn tips to $15. Economists project over 5,400 of West Virginia’s total job losses would fall in hospitality, and nearly 30 percent will fall on tipped workers. More-than-doubling the minimum wage across the country will harm states and businesses that have wide variation in their costs and margins. For instance, the Heritage Foundation’s Rachel Greszler estimated that a $15 federal minimum wage in Mississippi would be the equivalent of a $22.44 minimum wage in New York state, and $35.74 in Washington, DC. A similar calculation holds up for the relative impact on West Virginia.
If anything, New York’s experience with a $15 minimum wage should be a cautionary tale. When the Big Apple hiked its minimum wage to $15 and slashed its tip credit, restaurants crumbled. One year after a state-wide wage board raised the tipped minimum wage by more than 50 percent, Census Bureau data revealed that more than 500 New York restaurants closed.
For workers who don’t lose their jobs due to this policy, restaurant employees fear they will lose their tip income, which often puts more money in the pockets of workers.
The 470 percent “raise” to a flat $15 wage could lead to a pay cut for West Virginia’s tipped workers. In New York City restaurants that switched from tipping to a flat $15 minimum wage, workers claimed their total earnings decreased. One server reported her annual take home pay dropped by $10,000. My organization is committed to helping West Virginia rebuild its economy after the pandemic, and come back stronger than before. But Washington’s policy making — only informed by failing experiments in places like New York — won’t get us where we need to go, and harm our employees in the process.
Sens. Manchin and Capito must continue to hold the line and protect West Virginians against the bad policies that have already damaged New York. West Virginia must not look towards mandates, restrictions, regulations, and government constraints like a federal minimum wage for prosperity but rather towards freedom, entrepreneurship, and innovation.
Garrett Ballengee is the executive director of the Cardinal Institute for WV Policy, a free-market research nonprofit organization located in West Virginia.