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Take a Walk on the Hedonic Treadmill
Here’s what happens when you raise the minimum wage to $15 an hour, according to scientists:
Well, not nothing. All kinds of bad things happen to the economy. But nothing happens for two groups of people central to the whole debate: workers who get a bump to $15 and employers who have to bump to $15 an hour.
Most cities and states that have raised their minimum wage laws to $15 will phase in the increase over five years. That pretty much means the market will have adjusted to the change long before it becomes effective. But that’s a terrible scenario to test my theory, based on research by Harvard psychologist Dan Gilbert.
Let’s do this instead: let’s raise the minimum wage to $15 in 30 days.
But first, let’s give a standard happiness survey to a thousand minimum-wage earners before we announce the increase. And let’s give the same test to wager payers.
Then, let’s re-administer the test to both groups 30 days after the minimum wage hike goes into effect. And let’s test them all again one year later.
To keep the experiment clean, the final analysis will include only those who a) kept their minimum wage job for the whole year, or b) kept their minimum-wage paying business open the whole year.
I can tell you the results. One year after the minimum wage goes to $15 an hour, workers making minimum wage will be just about as happy as they were before they learned the minimum wage was going up. Same for the businesspeople who pay them.
In between, just after the wage jumps to $15, worker will be euphoric and owners will be miserable.
It’s called the hedonic treadmill. Even if we ignore the economic effect of a big jump in minimum wage (like business failures and higher unemployment for those who most need entry-level jobs), we know from science that people adjust quickly to changes in their circumstances.
When you get a new car, it’s awesome, but a year later, it’s nothing special.
When you buy a new pair of shoes, you love them. And even if they’re still in great shape a year later, they’re just a pair of shoes.
Dan Gilbert found that one year after winning the lottery and one year after becoming paralyzed, both groups of people were just about as happy as they were immediately before those life-changing events.
Dan Gilbert, (1) a Harvard psychologist has researched lottery winners and found that ‘the happiness effect’ starts to decline after just a few months. Once the initial elation of getting the big cheque has worn off , people seemed to return to their previous level of happiness or unhappiness.
Raising the minimum wage to $15 is a political ploy with economic downsides and no long-term benefit for the people who get the minimum wage.
On the other hand, helping a $7.25 an hour worker earn a 100 percent raise does wonders for that person’s life, outlook, and self-esteem while providing economic benefits to his employer, his family, and his community.
So go ahead and double the minimum wage, Francis. It will do nothing but accelerate St. Louis’s slide toward irrelevancy.