Economists Weigh the Pros and Cons of a $15 Minimum Wage

Economists are mixed about whether or not states should gradually raise their minimum wage to $15 an hour -- an issue that's front and center after California lawmakers said they would do just that by the year 2020.

Last September the Booth School of Business at the University of Chicago polled 42 economists about a $15 minimum wage hike -- but there was no clear consensus about whether the wage increase would affect the unemployment rate for low-wage U.S. workers.

Steve Kaplan, a professor at the University of Chicago Booth School of Business and one of the economists polled in September, opposes a $15 minimum wage. He called the increase "a terrible idea," arguing that it will cost jobs and reduce investment in companies.

"The big challenge today is we have technology that's replacing people. With that headwind of technology, the worst thing to do is to make jobs more expensive. Technology is already taking jobs," Kaplan told ABC News. "What you ought to do is make it easier to hire people."

One way to make it easier to hire people is to promote the Earned Income Tax Credit, Kaplan said. Berkshire Hathaway CEO Warren Buffett has also publicly advocated an expansion of the Earned Income Tax Credit.

"It gives low wage employees extra," Kaplan said. "It doesn't reduce incentive for employer to hire, and it helps employees earn more."

In 2014, 600 economists wrote a letter to President Obama and other lawmakers, urging them to raise the minimum wage to $10.10 now $7.25 an hour.

New York Gov. Andrew Cuomo has also come out in favor of a $15 minimum wage for his state.

Arindrajit Dube, associate professor of economics at University of Massachusetts Amherst, said the potential wage increase in California constitutes a "big experiment."

"The risk of course is that when you raise wages sufficiently higher, you slow down hiring," he said. "When you go big, both the rewards and the risks are bigger."

Some economists stress that a wage hike should be done incrementally.

"The most important thing is that California is doing this over a six-year period, that is the smart move," Jerry Newman, a professor at the University at Buffalo's School of Management and author of "My Secret Life on the McJob: Lessons from Behind the Counter Guaranteed to Supersize Any Management Style."

If there is an increase in a minimum wage, it could have far-reaching effects on industries that don't pay it.

"Wage hierarchies have been rigid for a long period of time, but this could change all of that," Newman said. "If I am making $15 right now at a bank, and someone is making $12 at a fast-food restaurant, and that gets raised to $15, it creates pressure to raise the wages of that bank teller."