NCPA - National Center for Policy Analysis

Union Leaders Sue Gov. Scott Walker to Raise Minimum Wage

October 31, 2014

This week, Wisconsin labor leaders announced their intention to sue the governor of Wisconsin, insisting that he raise the minimum wage to that of a "living wage." Under Wisconsin law, a living wage is one that provides a person with the ability to live in "reasonable comfort."

But Carrie Sheffield, fellow at the Competitive Enterprise Institute, writes that Wisconsin minimum wage workers will only be hurt by a minimum wage hike, which actually most benefits those workers already living above poverty:

  • Raising the federal minimum wage from $7.25 to $10.10 per hour would cost 500,000 jobs across the country. The poor are most likely to lose their jobs as a result of the law.
  • Only 19 percent of wealth from a minimum wage hike would go to workers who are poor.
  • Twenty-nine percent of that raise would go to households with earnings more than three times that of the poverty line.

Significantly, low-wage workers in the Badger State are already able to live in "reasonable comfort" under the current wage rate, says Sheffield:

  • A minimum wage employee earning $7.25 per hour in Wisconsin for 40 hours per week would have annual earnings of $15,080. That is 27 percent higher than the federal poverty line for an individual in 2013.
  • Moreover, the Earned Income Tax Credit for the average Wisconsinite was $2,167 in 2013 -- adding that puts the minimum wage worker's earnings above $17,000.
  • Adding transfer payments -- whether from Medicaid (an average of $5,300), food stamps ($1,800), housing assistance ($8,000) or college tuition Pell grants ($3,900) further boosts income significantly.
  • In all, that adds to $36,247 -- 32 percent higher than the per capita income in Wisconsin. Deducting for taxes, it's 23 percent above the average Wisconsin salary. And if the person does not receive Pell grants, it's still 18 percent higher (at $32,347) than Wisconsin's per capita income.
  • A child would add an additional tax credit of $1,300, on average, and a child with a disability would add $6,300.

Sheffield writes that the best cure for poverty is work, as only 4.2 percent of people who work full time are in poverty. Why would the state's labor leaders want to push for laws that only result in lost jobs, pushing people further into poverty?

Source: Carrie Sheffield, "Math Doesn't Add Up In Suspiciously-Timed Wisconsin Minimum Wage Lawsuit,", October 28, 2014. 


Browse more articles on Economic Issues