Raising the minimum wage actually does little to address poverty since most poor people are unemployed, a report published Thursday concluded.
Democrats have push for laws to increase the minimum wage as a way to help people rise above the poverty line, while opposition warns such increases come with unintended economic consequences. The Employment Policies Institute (EPI) found in its report “The Non-Working Poor and a $15 Minimum Wage” the policy doesn’t even help the majority of poor people.
“One of the most cited reasons for increasing the minimum wage is that it’s necessary in order to reduce poverty rates,” the report noted. “But Census Bureau data show that the policy faces a more fundamental problem: A majority of Americans in poverty don’t work, and thus won’t be affected by the raise.”
EPI looked at government data for working age adults between 2013 and 2015. It found that in 41 states the majority of resident living in poverty and not employed. New York and California for instance both became the first state Apr. 4 to raise its minimum wages to $15 an hour but they too have high unemployment rates among impoverished people.
“New York, 68 percent of those living in poverty lack work, and a higher minimum wage is likely to put it further out of reach,” the reported continued. “In California – where a $15 wage has also been approved – over 60 percent of individuals in poverty don’t work.”
The report adds some unemployed people are disabled, making minimum wage irrelevant. The $15 minimum wage has grown in popularity in recent years as a way to fix income inequality. The Fight for $15 movement has been at the forefront of the policy push since it started in 2012. While the policy will do nothing to help unemployed poor people it might also hurt those with employment.
Laws that increase the minimum wage risk putting undue financial stress on businesses. The higher the increase the more shocked the system will be, which is why many states have adopted a stepped process. Regardless of progressive implementation, businesses could be forced to increase prices or even cutback on their workforce to overcome the added cost of labor. While income increases for some, others might lose their jobs and struggle to find another one.
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