A new study concludes that increasing the minimum wage will lead to fewer jobs rather than less poverty.
“The disconnect between the empirical evidence and the claims of wage hike advocates continues to grow,” said Michael Saltsman, research director at the Employment Policies Institute, which conducted the study..
With the poverty level in the U.S. reaching record highs, some have called for a higher minimum wage as an anti-poverty measure.
But the EPI study found “no statistically significant evidence that a higher minimum wage helped reduce hardship” with things like housing, health, financial and food insecurity.
“The reality is that fewer than 20% of people who earn the minimum wage are poor, and most poor people already earn more than the minimum wage,” Jason Riley notes in the Wall Street Journal.
“[Minimum wage] not a cure-all to poverty,” Bob Pollin of the University of Massachusetts at Amherst told Marketplace.org. “In fact, the biggest source of low-income poverty is that people don’t have jobs at all.”
A separate EPI study suggests the minimum wage is disproportionately harmful to minorities.
“Among white males in this group [age 16-24], the authors find that each 10 percent increase in a federal or state minimum wage decreased employment by 2.5 percent…But among black males in this group, each 10 percent increase in the minimum wage decreased employment by 6.5 percent,” the study finds.
“This new study demonstrates the faulty empirical methods used in defense of minimum wage increases, and thoroughly debunks the irresponsible rhetoric pushed by wage hike advocacy groups,” Saltsman said in a statement.
The EPI in fact argues that the Earned Income Tax Credit is a much more effective anti-poverty measure than the minimum wage.
“Each one percent increase in a state supplement to the federal EITC reduces poverty rates by one percent,” the report’s authors write. The policy also provides an incentive to seek employment, since the credit is only claimed on earned income.
Currently, the state of New York is debating a minimum wage increase. While Democratic legislators rally public support, study after study indicate that
Jeffrey Furman, Chair of the Board of Directors for Ben and Jerry’s Ice Cream, contends that the increase is needed to help working class families.
“For the sake of New York’s lowest-paid workers …raising New York’s minimum wage must be the very first order of business,” Furman writes in the Huffington Post.
“When you raise the price of anything, people take less of it, including labor,” Forbes contributor William Dunkelberg counters. “Workers of all ages that are relatively unskilled are adversely impacted by this policy.”
“The research record still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others,” the EPI report’s authors write “and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.”
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