Thoughts on the Minimum Wage
Some interesting facts and figures have jumped out at me as I've done a study of the poor and how they would be affected by the Minimum Wage. A more efficient way to help the poor is through the Earned Income Tax Credit. Click "Read More" to read about that, plus a few other of my (hopefully coherent) ramblings on the subject.
I know someone whose husband left her, and if she isn't making the minimum wage as the now-sole breadwinner in her family, she's making pretty close to it. She has no phone. She has no car. Her oldest son is in and out of trouble with the law all the time. Would she be better off with more financial means? In every way. And I think there should be a way to help her become financially more well off and on the road to self-sufficiency.
Utah currently pegs its Minimum Wage to the Federal one. This to me is a State not taking care of its responsibilities, and expecting the Federal government to do its business for it.
I'm not sure why we want a Federal Minimum Wage anyway. Considering that the Constitution ensures that the Federal government will promote the "general welfare", how does a federal minimum account for the fact that the cost of living is about twice as high in California (and nearly three times in New York City) as it is in Alabama? This is an issue that should be taken care of on a state-by-state basis.
When the minimum wage is raised from $5.15 to $6.20 and then to $7.25, what happens to those who make just barely above the new minimum thresholds? Do they get raises, too? How does this affect small businesses, who are the least likely to be able to afford to pay higher wages? Do they decide to hire illegal aliens, who are not covered by wage laws?
Nearly all of those making the minimum wage currently will not be making that wage very long. The following comes from the Employment Policies Institute:
Virtually all minimum wage employees will see their incomes rise as they increase their value to employers by gaining skills through experience. Analysis of US Census Bureau data shows the median raise these employees receive is six times higher than that of employees earning above the minimum wage.
Raising the minimum wage prices certain populations out of the market--those who are no longer worth whatever the minimum wage has become. Most often that population contains youth who, in the absence of employment, involve themselves in gangs and other destructive activity.
There are better ways, such as tax credits and eliminating sales tax on food, to help poor families. Nearly 85% of those making the minimum wage live in families that are far above anything considered poor. They may want the help, but they don't need it. It would be better to concentrate on the 15% of minimum wage earners and their families who DO need it.
Earned income tax credits reduce or eliminate the tax burden of low-income families. They can even be structured such that they become a subsidy to low-income workers. Earned income tax credits are a much better way to help those who really are in financial dire straits, while not harming the economy in general, and small businesses and less-skilled workers in particular.
Very few Utahns as a percentage earn the minimum wage. Only 9% of the Utahns who make the minimum wage are sole wage earners in their families. If we really want to help them, and I think we do, an earned-income tax credit seems to be the best way to go.
For several reasons I do not support a Minimum Wage. But the most important reason is that there are better ways to help the people who need our financial help the most.