If one is to believe House Minority Leader Nancy Pelosi (D-CA) as well as those who agree with her, increasing the minimum wage is one of the best anti-poverty tools that benefits laborers and creates jobs.
To test that proposition, let's consider a bit of history, courtesy of Ben Gitis, a policy analyst at the American Action Forum:
- With the Labor Department finding that nearly 25% of children were working 60 hours/week for a median weekly wage of $4.00 ($1.14 per hour, in 2013 dollars), the federal minimum wage was introduced in 1938 as part of the Fair Labor Standards Act.
- In 2011, 78.7 percent of minimum wage earners were not in poverty and 36.6% of people working hourly minimum wage (or below) jobs were teenagers living at home, whose families had average incomes of $103k+.
- Today, minimum wage workers comprise only 1.9% of all wage and salary workers.
So what's this mean in practice?
Those who advocate increasing the minimum wage are dead wrong when citing its effectiveness as an antipoverty tool. Given its history, increasing the minimum wage is more likely to increase the income gap because of the disproportionate number of teenagers earning the minimum wage (or less) and living in families with incomes well above the national average.
While increasing earnings for those who already have jobs,increasing the minimum wage further limits the earning potential of the unemployed and those most in need.
So, let's see if The Motley Monk "gets it." Those who agree with Nancy Pelosi assert that raising the minimum wage will assist the unemployed and those who are most in need. But, history teaches that implementing this policy will not alleviate poverty. Instead, the policy will increase poverty as well as provide higher wages to families who need it least.
Only in Liberalville, USA, are such policies given serious consideration and implemented into law under the moniker of "wage equity."
Let the discussion begin...
To read Ben Gitis' study, click on the following link:
"Primer: Minimum Wage and Combating Poverty."