Posted on 12/31/2015 7:30:15 PM PST by Kaslin
We reach the end of the year with yet another tale of crazy, one percenter wingnuts trying to claim that jacking up the minimum wage won’t do much to alleviate the issues facing the poorest Americans who the Democrats are seeking to help. This time the hateful claims are coming from… a study published by the federal government.
Increasing the minimum wage is an inefficient way to reduce poverty, according to a Fed research paper that comes amid a national clamor to hike pay for workers at the low end of the salary scale.
David Neumark, visiting scholar at the San Francisco Fed, contends in the paper that raising the minimum wage has only limited benefits in the war against poverty, due in part because relatively few of those falling below the poverty line actually receive the wage.
Many of the benefits from raising the wage, a move already undertaken by multiple governments around the country as well as some big-name companies, tend to go to higher-income families, said Neumark, who also pointed to research that shows raising wages kills jobs through higher costs to employers. Neumark is a professor of economics and director of the Center for Economics and Public Policy at the University of California, Irvine.
I’m sure that Hillary Clinton and Bernie Sanders will find a way to spin this story, as well as Ben Carson for that matter. (Rick Santorum too, now that we mention it.) But the numbers here really don’t come as any surprise when you stop to think about it. This report doesn’t deal so much with the employment impacts of a higher federal minimum wage, but more with who is getting those wages.
As the study shows, 57% of families currently below the poverty line have no members in the workforce, receiving all of their income from social welfare or entitlement programs combined with charity. A higher minimum wage has no effect on these families. Of the roughly 3 million workers who do receive the minimum wage, more than half are between the ages of 16 and 24 and are generally not the primary breadwinners in their households. Further, they found that among the families below the poverty line, nearly half (46%) are making more than the proposed $10.10 per hour already and more than one third (36%) are making 12 dollars per hour or more.
With those figures in mind, only a relatively small fraction of Americans living below the poverty line would see one extra red cent in their pockets with a higher federal minimum wage. And what can not yet be predicted is how many of those who did would be offset by the number of employers who would simply terminate unskilled labor positions to avoid the increased labor costs, moving to either more streamlined services or automation. And this is coming straight from the feds. How will the Fight for Fifteen folks and their pet Democrat candidates respond to this new information aside from abject denial? Oh, wait… the denial started already.
“The mainstream view, as illustrated by meta-surveys of the whole minimum wage research field, is that the job loss effects of raising the minimum wage are very, very small,” Paul Sohn, general counsel for the National Employment Law Project, said in an email to CNBC.com.
I’m sure the phrase “very small” will come as great comfort to the guy who loses his job operating the fry machine around the holiday season. But don’t let that bother you, guys. We’re from the government and we’re here to help.
I am thinking of a career change. Kiosk salesman looks pretty lucrative.
The late Prof. Irwin Corey, the world’s foremost authority, made a good living espousing the same as above without working for the government or investing in a kiosk.
As I have said on more than one occasion. Raise the minimum wage and the local merchants will raise their prices accordingly. Zero sum gain.
A higher minimum wage helps increases inflation.
So not only do you have to pay more for average services but your money will be worth less...worth less... worthless.
Sorry, I should have also pinged you to 3.
You can bet he won't be getting tenure at 99% of the colleges in the USA!!! If you don't enter the data in the "correct way" and get such results..., you are persona non grata!
...but it buys votes.
I’ve worked at minimum wage, and every time it was raised our hours were cut. So what good is raising the minimum wage? Business owners, aren’t stupid. They know how to get around it
An increase in the minimum wage is a trigger factor for increases in union wages - Democrats love union people.
You need a minimum in a country with a 2000 mile open border with the third world. Unmitigated illegal labor plus no minimum wage equals disaster. Close the border and we’ll see. Go Trump, go!
I saw a great example of that in Australia. The exchange rate was close to 1:1 last June when I was in Sydney. EVERYTHING cost more. Young people could not afford houses (even the shacks there went for over $300,000). The BIG news was that they’re claiming that people there can’t live on the minimum wage and that it should be raised FROM, as I recall, about $18 / hour. RAISING THE MINIMUM WAGE DOES NOT LIFT PEOPLE OUT OF POVERTY. It just moves the line as to what constitutes poverty.
Funny how anyone with experience on the business side has known this for decades.
Toldja
Was anyone saying it reduced poverty? I thought the emphasis was on people having money for food. Seriously, I don't think I've heard anyone say raising the minimum wage will reduce poverty.
Maybe marriage reduces the poverty rate and more women should try it before becoming mothers
Minimum wage was never meant to alleviate poverty, but to exacerbate it. The democrats get the votes for the “effort” but keep everyone in tatters so they’ll continue to be needed. It’s no secret.
See my post in #4
As a Property Rights Expansionist, I believe the solution is obvious.
The number and proportion of adults earning minimum wage has been increasing now for some time and has reached the critical mass now manifesting in protests and calls for a $15 minimum wage.
This critical mass of adults living on minimum wage has one primary problem. The elephant in their budgets is the cost of rent: Half of all low-income Americans spend at least half their income on shelter, according to Mortgage News Daily.
The obvious solution is to expand property rights and thereby allow the Invisible Hand of the marketplace and private sector to resolve the problem by increasing the supply of housing affordable to minimum wage earners.
A corollary to this is that government will never end homelessness; only the private sector can do so.
Marriage to another minimum wage earner generally does not enhance the economic position of single mothers.
Which is one reason why men earning minimum wage are undesirable as marriage partners, and one reason why calls for marriage as the way out of poverty don’t resonate with single parents.
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