Raising The Minimum Wage Is Bad Idea
February 26, 2013 - 3:11 pm
The raising of the minimum wage is another one of those unicorns liberals like to chase after, and waste valuable time in doing so. President Obama called for another increase in the federal minimum wage to $9 during his State of the Union address, and liberals are warming to the idea. Obama noted that some states have already passed minimum wage requirements higher than that mandated by the federal government. The president misses the irony in that statement. The states passed higher minimum wage requirements on their own because those respective legislatures thought it would better serve their residents. They didn’t need a push from Washington to come to that conclusion.
Now, some say not raising the minimum wage is “craven and grotesque.” The Guardian’s Heidi Moore wrote on February 14.
The issue about minimum wage, for instance, has almost nothing to do with full-time workers and whether they get hired or not. Only 5.2% of hourly workers are paid minimum wage or below. That’s 3.8 million people. It is true that affecting the pay of such a small number of people won’t solve America’s increasing problems of poverty or income inequality by itself.
But what happens when you look at part-time workers? Then you understand how craven it is to deny workers minimum wage.
There are 8 million workers who are working part-time due to economic reasons, according to the Bureau of Labor Statistics. That means that they want to work full-time, but can’t. There are also 18.7 million workers who are part-time out of choice, or for “non-economic reasons”. Those part-time workers are where poverty ends up concentrated, and where the minimum wage will make the most impact.
Try this number, for instance: Over one in five American children is living in poverty. There are others, but are they really necessary? This is the world’s leading country and 20% of children are part of families that can barely find money to eat.
She then writes that it shouldn’t take government action to tell corporate leaders to pay their workers a “living wage.”
James Sherk of the Heritage Foundation wrote that, “labor economists have repeatedly studied the effects of minimum-wage increases. They find no correlation between higher minimum wages and lower poverty. Raising the minimum wage to $9 an hour as the president suggests simply would not reduce poverty.” Also:
[R]aising the minimum wage makes these entry-level jobs harder to find. That makes it harder for less skilled workers to gain the skills necessary to get ahead. In effect, it saws off the bottom rung of their career ladder. That is bad enough in normal economic times, let alone during an anemic recovery from a deep recession.
Finally, the welfare state claws back raises that low-income families do receive. Low-income workers qualify for a host of means-tested federal benefits. These include food stamps, housing vouchers, Medicaid and the Earned Income Tax Credit. As workers’ incomes rise they qualify for less and less aid – effectively an additional tax on their income. The Congressional Budget Office finds these reductions push many low-income workers’ marginal tax rates to nearly 100 percent.
A single parent working full time at the minimum wage makes $15,000 a year. A raise to $9 an hour would increase their pay almost $4,000 – almost all of which they would then forfeit through reduced benefits.
Even the New York Times disagreed with raising the minimum wage back in 1987. In fact, they said it should be abolished. In a column from their editorial board, the Times argued that an increase in the minium wage:
…would increase employers’ incentives to evade the law, expanding the underground economy. More important, it would increase unemployment: Raise the legal minimum price of labor above the productivity of the least skilled workers and fewer will be hired. If a higher minimum means fewer jobs, why does it remain on the agenda of some liberals? A higher minimum would undoubtedly raise the living standard of the majority of low-wage workers who could keep their jobs. That gain, it is argued, would justify the sacrifice of the minority who became unemployable. The argument isn’t convincing. Those at greatest risk from a higher minimum would be young, poor workers, who already face formidable barriers to getting and keeping jobs. Indeed, [then] President Reagan has proposed a lower minimum wage just to improve their chances of finding work.
The idea of using a minimum wage to overcome poverty is old, honorable – and fundamentally flawed. It’s time to put this hoary debate behind us, and find a better way to improve the lives of people who work very hard for very little.
Additionally, the USA TODAY editorial board wrote on February 24 that raising the minimum wage shouldn’t happen now, and that measure to bridge the income gap are “limited.”
Nevertheless, raising the minimum wage enjoys overwhelming popular support, but it’s bad policy. Those who would make gains in pay would see those earnings evaporate from expenses that were originally covered by government programs. Programs they are not eligible for due to their increased earnings.
So, in short, such a measure would have a de minimis effect in bringing people out of poverty. In fact, the opposite could happen.