#4 | Posted by nullifidian
Facts suck dont it to you liberals.
Supporters argue that a higher minimum wage is an effective anti-poverty tool. If businesses must pay their low-wage employees more, then those workers should earn more and fewer of them should live in poverty. Common sense says a higher minimum wage should fight poverty.
The facts, however, show otherwise. Many economists have examined the evidence and come to the surprising conclusion that the minimum wage does not reduce poverty. Ohio University economists Richard Vedder and Lowell Gallaway examined the effect that increases in the minimum wage had on the overall poverty rate in the United States and on the poverty rates for groups like minorities and teenagers that might especially benefit from higher minimum wages.They found that the minimum wage had no statistically detectable effect on poverty rates.
Other researchers have approached the evidence in different ways and reached the same conclusion. For example, economists David Neumark of the University of California-Irvine, Mark Schweitzer of the Federal Reserve Bank of Cleveland, and William Wascher of the Federal Reserve Board examined how the minimum wage affects the incomes of families living near the poverty line. In a series of papers, they repeatedly reached the same conclusion as Vedder and Gallaway: A higher minimum wage does not lift low-income families out of poverty. Their results were particularly clear:
The answer we obtain to the question of whether minimum wage increases reduce the proportion of poor and low-income families is a fairly resounding "no." The evidence on both family income distributions and changes in incomes experienced by families indicates that minimum wages raise the incomes of some poor families, but that their net effect is to increase the portion of families that are poor and near-poor.
Whether measured by the poverty rate or by the earnings of low-income families, the minimum wage does not help the poor.
Higher Minimum Wages Cost jobs and Working Hours
A major reason why the minimum wage is such an ineffective anti-poverty tool is that minimum-wage hikes cause businesses to reduce the number of workers they hire and the hours they ask their employees to work.
Most estimates suggest that each 10 percent increase in the minimum wage reduces employment in affected groups of workers by roughly 2 percent. Thus, raising the minimum wage to $7.25 an hour would cost at least 8 percent of affected workers their jobs. A higher minimum wage helps only those workers who actually wind up earning that wage and further disadvantages lower-income workers, who suffer fewer job opportunities and working hours. Though intended to help low-income families get ahead, the minimum wage instead costs some their jobs and others hours at work. This leaves poor families actually worse off.
Few Minimum-Wage Workers Are Poor
Another reason for the failure of higher minimum wages to reduce poverty is that the vast majority of minimum-wage workers do not live in poverty. Much of the benefit of a higher minimum wage accrues to suburban teenagers and college students, not the heads of poor families. A majority of minimum-wage earners are between the ages of 16 and 24, and over three-fifths of minimum-wage earners work part-time. The average family income of a minimum-wage earner is almost $50,000, and less than one in five live at or below the poverty line.
It therefore should not be surprising that higher minimum wages do little to benefit poor families when minimum-wage workers are only slightly more likely to be poor than is the population as a whole.
