NCPA - National Center for Policy Analysis


June 4, 2004

A recent BusinessWeek article detailed the lives of several "working poor" individuals before advocating a higher minimum wage and better child care options for low-income workers. The front-page headline said: "One in four workers earns $18,800 a year or less, with few if any benefits."

However, as columnist Thomas Sowell points out, that statistic is purposely misleading:

  • The article later notes that a third of the "working poor" are part-time workers and another third are younger than 25; thus, less than 10 percent of American workers are actually "working poor" in a full-time, long-term sense.
  • An absolute majority of those in the bottom 20 percent in income in 1975 have since moved into the top 20 percent.
  • Though wage rates haven't increased much for low-income jobs in the past 30 years, most people in the bottom 20 percent stay there only temporarily
  • .

What the article fails to point out, says Sowell, is that the majority of young, inexperienced workers gain skills and move up the wage ladder over time. Creating entitlements like a high minimum wage, he says, only discourages them from seeking skills and training that would increase their pay.

Sowell argues that far from ensuring better-paying jobs, provisions like a high minimum wage and more powerful unions will increase unemployment by making labor more costly.

Source: Thomas Sowell, "Scratching Beneath Surface of the 'Working Poor' Myth," Investor's Business Daily, June 2, 2004.


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