Yahoo Finance's Rick Newman joined Yahoo Finance Live to discuss the impact of raising the minimum wage to $15 an hour.

Video Transcript

ADAM SHAPIRO: We're going to keep talking about the minimum wage. But there might be a different way to raise it, depending on what part of the country you live in. Rick Newman joins us now with that. And Rick, I'm thinking back, if I'm correct, I think when you and I were teenagers, the teenage minimum wage, at least when I was pushing pizza in Old Orchard Beach, Maine, was $2.35 an hour.

RICK NEWMAN: Well, that tells you that-- that tells you our age differential, because the minimum wage when I was in high school was $3.35. That's what I get for washing dishes.

ADAM SHAPIRO: I'm old.

RICK NEWMAN: But, you know, I've heard from some of our audience members as we've been covering this, and some people have asked me, why do we have to have a single number for the entire country, given the huge variation in living costs? And so I reported it and researched it. The answer is you don't need a single number.

And in fact, in 2019, a few Democrats in the House, they proposed a new minimum wage structure that would have five tiers. So the highest here for the most expensive cities, minimum wage would eventually rise to $15. That's what Bernie Sanders wants. But then you'd have, for less expensive cities, when you got to that point, it would be perhaps $13 in those areas, or even as low as around 11.50.

And that, I think, actually makes more sense. I've asked some economists about this, and they say, yeah, that really is the way to do this right. Because, you know, a one-size-fits-all number from Washington doesn't fit everywhere in the country. Alas, that's not what they're talking about in Congress. They're having this argument over, should it be $15 or just stay where it is?

It's not going to be $15 everywhere. That's not going to happen. So we'll see where this goes.

SEANA SMITH: Well, Rick, how feasible is this? Meaning the data that will be necessary in order to make this happen, in order to determine what rate certain regions should have. I mean, how accessible is that type of data?

RICK NEWMAN: It's totally feasible. The data already exists. And in fact, the federal government itself already pays its own workers, 1.5 million federal employees, on a regionalized basis. They've got, like, 50 different zones that people live in, and you get paid differently based on where you live.

The Labor Department has what you call purchasing parity data or price parity data for about 385 cities and for every state. So the data is already there. You just have to create what would be a relatively simple formula and then write that into law. And you could do this. This is not a huge technological leap. It's just something that Congress doesn't want to do for basically political reasons.

ADAM SHAPIRO: Hey, I was looking up--

SEANA SMITH: Well, then, Rick, then why hasn't it been done?

RICK NEWMAN: Well, for one thing, I think you have-- first of all, the minimum wage is hard to raise. It has not gone up since 2009. Republicans are normally very reluctant to raise the minimum wage at all. And if they ever agree to a minimum wage, which they do every now and then, it's generally very small-- a very small increase.

And on the other side, progressives, they say that it has to be $15. And if you don't get to $15 everywhere in the country, then you're just-- you're, like, locking in people at lower wages that they can't live on. But the reality is, if you're such an absolutist that you say it has to be $15 or nothing, well, then you end up stuck with 7.25. Because Congress is not going to agree to $15.

ADAM SHAPIRO: Rick, there is precedent for all of this too, because I was looking up the state of Maine. It was 3-- the years I was talking about, when I said 2.35, it was 3.30 for adults. People under the age of 18, it was 2.35. So there is this precedent for having different minimum wages depending. So why wouldn't they do that?

RICK NEWMAN: Totally, yeah. And in fact, I mean, we actually do have sort of an ad hoc regional minimum wage as it is. Because a few cities have their own minimum wage. I looked up San Francisco's minimum wage, it's $16.07. But of course, if you get outside of San Francisco, it's not $16. So that's a regional structure. Oregon has a regionalized structure.

And I'm glad you bring up teenagers, Adam, because one of the concerns that economists have, and there's a lot of good research on this, is if you do significantly increase the minimum wage, you are going to lose some jobs. And they're mostly going to be teenagers whose jobs are just going to disappear. I mean, if employers have to pay more for each worker, they're going to hire fewer workers.

And it's going to be a lot of those entry level jobs that get teenagers into the workforce in the first place, which was your job at the pizza place and my job washing dishes or washing cars in Pittsburgh when I was growing up. So you would sort of cut off opportunities for teenagers if you raised it by so much that employers had to cut back.

ADAM SHAPIRO: I believe Boston Pizza is still there at Palace Playland in Old Orchard Beach. Jon Nathanson is long gone, bless his soul. But yet, teenagers need work as well.