Fed, of course, by the media, there is a prevailing myth that poor, full time workers will be positively impacted by a raise in the minimum wage. The foolishness of that whole sentence makes me wonder where to even start on debunking it. I guess we start with beginning of the sentence: “poor, full time workers” and go from there.
You’ve heard the rhetoric. President Obama is leading the charge with statements like “no one who works full-time should have to live in poverty.” You’ve seen the McDonald’s workers strike, demanding $15/hour. Or Democratic leadership spouting off about how American workers deserve better wages. Pure rhetoric, all of it. The Bureau of Labor Statistics and the Census Bureau compiled data on minimum wage and who earns it. 97.1% of working Americans earn above minimum wage. 2.9% of all workers in the US are minimum wage earners (MWEs). Most MWE’s are young, part-time workers generally living with parents and above the poverty line. In fact, the average family income for a minimum wage earner is over $53,000/year (the 2013 Federal Poverty Guidelines state that the poverty line for a family of 4 is $23,550, well below the average family income for a minimum wage earner.)
Want some more interesting facts about minimum wage earners? Well, let’s start with the number of minimum wage jobs – you know, that 2.9% figure. More than half are between 16 and 24 years old and work during non-school hours. This larger category come from middle class households and live in households that don’t rely on their income. Of all these MWE’s:
— 79 percent work part-time jobs.
— 62 percent are enrolled in school during non-summer months. In fact, most are high school or college students.
— Their average family income is $65,900 per year.
— Fully 60 percent are women.
— Only 5 percent are married.
Where older workers fall into the MWE mix (older being 25+):
— Over half work part-time jobs.
— They have an average family income of $42,500 per year. Granted, that isn’t living high on the hog, but it certainly isn’t destitution either.
— 75% of these MWE’s live above the poverty line, while 62 percent have incomes over 150 percent of the poverty line.
— Most of them choose to work part-time, and are married
— They’re generally better educated than younger minimum-wage workers but still have less education than non-minimum age workers. In fact, only 8% have a college degree.
— 67 percent are women.
Increasing the minimum wage, therefore, doesn’t reduce poverty. As the data above shows, most in poverty aren’t MWE’s. The problem with most Americans living in poverty isn’t low wages, it’s no wages. 67% of those living at or below the poverty line didn’t work at all, 25% only worked part time and only 9% worked full time. You can find more here and here about the BLS Stats for 2011, which is where most of the information above is found.
Guess what raising the minimum wage does accomplish? Job loss. A recent report by the Congressional Budget Office addressed the low-wage, boost-out-of-poverty rhetoric, and toed the rhetorical line, but made an interesting point (one I’m sure was completely lost on them): Raising the federal minimum wage to $10.10 would boost the incomes of MWE’s and supposedly lift 900,000 out of poverty. But it could also result in the loss of 500,000 jobs. Now, keep in mind that there are 1.7 MILLION+ MWEs, and 900,000 is approximately half that number. Given the BLS statistics above, 900,000 “in poverty” is just wrong.
But let’s, for the sake of argument, assume that figure is correct…of that 900,000, MORE THAN HALF OF THEM WILL LOSE THE JOBS THEY HAVE! So, this boost in the minimum wage will only benefit less than 25% of MWEs, most of whom are not living under the poverty level, and most of whom are teens. Some boost out of poverty ya got there!
So let’s revisit this really important “benefit” of raising the minimum wage: more than half of those supposedly “helped” by the increase aren’t living at or below the poverty line, aren’t working full time and will actually be hurt because they will have no job, not even one paying the current minimum wage!
So other effects on jobs and businesses when the minimum wage is hiked? For many, if not most, small businesses that means wage/tax expenses for employees increase tens of thousands of dollars a year. Most will either not hire, lay off workers, reduce hours for current employees or raise prices… or all of the above. That then is absorbed by all of us with higher prices, increased claims for welfare or unemployment benefits which affects our tax rates. Businesses will close, further harming this 5+ years of “improving” economy. Yes, that “improving” is sarcasm, the economy has done anything BUT improve over the last 5 years.
What’s the best way to get out of and stay out of poverty? Education and/or technical skills. Those with one or both are hired at wages well above minimum wage. They are the ones that fall into that 97.1% of workers who DON’T earn minimum wage. What’s the best way to increase the number of jobs? Help businesses stay in business with less overhead, lower taxes and certainly not by raising the minimum wage!
Image: Courtesy of: http://www.builderscounsel.com/2011/01/new-minimum-wage-for-washington-state/