Families Don't Depend on the Minimum Wage
October 17, 2011
The minimum wage is likely to be a hot-button issue in the 2012 presidential campaign. Currently, the federal minimum wage is $7.25, but it is as high as $8.67 in Washington state, says the Wall Street Journal.
Everyone favors the rising real wages and living standards that come with productivity advances and economic growth, but advocates of a higher minimum wage put the cart before the horse. A growing economy generates good jobs; higher wages don't grow the economy. And the overwhelming evidence is that higher minimum wages reduce the availability of jobs at the lowest end of the job market.
- A study from the Employment Policies Institute concluded that very few families depend on the earnings from a single minimum wage job for their economic support.
- The study also found that one out of four adults held a minimum wage job at least once during the years from 1998-2006.
- In addition, most adults who worked at the minimum wage did so for a relatively short time: Over 70 percent of them had no further minimum wage job after two years.
The survey data reveal that in two-parent families, nine out of 10 married-with-children minimum-wage workers have a working spouse. Even more revealing is how much income that spouse earns: 40 percent of those spouses earn more than $40,000 a year. Another 27 percent report spousal earnings of $20,000 to $40,000.
None of these households is in poverty. Nor is their economic wellbeing dependent on the minimum wage. In only 15 percent of these households are the earnings of both the minimum-wage worker and the spouse less than $10,000 apiece.
The long-term survey data are clear: Family dependence on minimum wages is the exception rather than the rule. In most cases, minimum wage earnings of adult workers are a small fraction of family income. Hiking the minimum wage as a way to achieve "poverty-level" incomes is both misguided and inefficient.
Source: Bradley Schiller, "Families Don't Depend on the Minimum Wage," Wall Street Journal, October 12, 2011.
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