Joseph J. Sabia and Robert B. Nielsen in Can Raising the Minimum Wage Reduce Poverty and Hardship? New Evidence from the Survey of Income and Program Participation:
It’s an intuitive thought: Raise the wages of the lowest paid workers, and poverty rates are sure to fall. Unfortunately, the empirical evidence hasn’t borne this out. Instead, multiple studies have demonstrated little to no relationship between a higher minimum wage and reductions in poverty.
They point to three factors that defeat the premise:
First, many people living in poverty don’t work and thus cannot benefit from a higher wage; second, a large number of minimum wage earners are not living in poor families; finally, raising the minimum wage can have the unintended consequence of reducing demand for the least-skilled employees.
A question for proponents of the minimum wage, including President Obama, would be: Given a current jobless rate of 44.3% for black male teens, would that group of America’s most vulnerable and unemployed workers receive any benefits from a 39% increase in the minimum wage from $7.25 to $10.10 per hour? Or would they most likely suffer from a minimum wage increase?
For the answer, see the title.
Don Boudreaux at Cafe Hayek:
Minimum-wage proponents fancy themselves to be especially “Progressive,” humane, caring, and economically sophisticated. ... But truly humane and caring people do not cavalierly (as do proponents of minimum-wage legislation) support a government prohibition on would-be workers offering to work for lower wages if these would-be workers can’t find jobs at higher wages – especially when such a prohibition is based upon questionable evidence, convoluted theorizing, and officious ethics. Most minimum-wage proponents don’t have bad motives; they have insufficiently thoughtful motives.
James Pethokoukis in There are better anti-poverty tools than the minimum wage:
Would raising the minimum wage cause job losses? Lots of conflicting studies here. But a 2013 literature review by David Neumark, J.M. Ian Salas, and William Wascher concluded “that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.” And research last month from Texas A&M economists Jonathan Meer and Jeremy West find raising minimum wage levels may discourage firms over the long-term from hiring new workers. And that may be particularly true thanks to continuing — even accelerating — advances in automation.
Mark J. Perry again, in Who’d a-thunk It? 18 different minimum wages in American Samoa by industry and a 30% jobless rate?:
The US Department of Labor mandates and enforces about 18 different minimum wages in American Samoa by industry. Oh, and the jobless rate there is almost 30%.
That is, if you trust the supposed wisdom of politicians to know what the “correct” single minimum wage is for the entire US economy (currently $7.25 per hour), shouldn’t you also trust those same politicians to know what the “correct” minimum wage is for America’s many different industries?
Finally, Thomas Sowell and Walter Williams discuss their work history as teens. If there had been a minimum wage, they would have been unemployed. Listen here. Or if you're a racist, don't listen.