Does raising the minimum wage actually harm the poor?
According to a study conducted by the conservative American Action Forum, increasing the minimum wage doesn’t fight poverty or close income gaps.
Supporters of raising the minimum wage argue that workers can’t live off a federal minimum wage of $7.25 an hour, which translates into $15,080 per year for a full-time worker.
This past September, California Gov. Jerry Brown signed legislation that increased the state minimum from $8 to $10 per hour. And even more recently, SeaTac, Washington raised its minimum wage all the way to $15 per hour.
President Obama also endorsed the idea presented by some members of Congress to set a federal minimum wage to $10.10.
Although these efforts were intended to help low income individuals, AAF’s research shows that the majority of people who live in poverty are not the ones earning a minimum wage salary.
In 2011, only 1.2 percent of people in families with incomes below the federal poverty line earned an hourly wage at or below $9 per hour and only 1.5 percent earned a wage at or below $10.10 per hour.
Even among all those who work and are in poverty, only 28.5 percent earn $9 per hour or less and 36.2 percent earn $10.10 per hour or less.
These figures, says AAF, “suggest that increases in minimum wage to $9 and $10.10 not only would fail to assist almost 99 percent of all people in poverty, but they would also neglect the vast majority of people in poverty who are actually working.”
Researchers found that the largest demographic of minimum wage earners are actually teenagers from middle-class families.
The AAF report determined that instead of fighting income inequality, an increase in the minimum wage may actually widen the income gap by limiting earnings from the unemployed and directing more money to the top 20 percent of earners.
According to the study, there is no statistical evidence that the minimum wage increases between 2003 and 2007 decreased state poverty rates. Researchers found that only 15.5 percent of the net benefits from raising the federal minimum wage to $7.25 went to workers living in poverty. They predicted that if the minimum wage were to rise to $9.50, a mere 10.5 percent of the net benefits would go to workers in poverty.
On Thursday, activists plan to protest in more than a 100 cities across the US, calling for a $15 per hour wage for fast-food workers.
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