Publisher's Note: One of the most significant things you can do to promote Liberty is to support our mission. Please make your gift to the 2024 Year-End Campaign today. Thank you! —Mark Alexander, Publisher

July 30, 2015

Good Intentions and Unintended Effects of the Minimum Wage

In November 2016, District of Columbia voters may get a chance to vote on a proposal to raise the hourly minimum wage to $15. If approved, the measure would lift D.C.’s minimum wage to be on a par with those in such liberal cities as Seattle, San Francisco and Los Angeles. But though the $4.50 jump from its current level might help a few workers, it would hurt many others, alongside consumers and businesses in some parts of the city. On the surface, this might seem like a way to increase the standard of living for lower-income workers in the district, but in reality, the policy would most likely backfire. For instance, research by economists David Neumark of the University of California, Irvine, William Wascher of the Federal Reserve Board and Mark Schweitzer of the Federal Reserve Bank of Cleveland shows that minimum wages increase poverty — and hence poverty reduction shouldn’t be expected as a benefit of raising the minimum wage. That’s because, contrary to common belief, the relationship between low wages and poverty is extremely weak.

In November 2016, District of Columbia voters may get a chance to vote on a proposal to raise the hourly minimum wage to $15. If approved, the measure would lift D.C.‘s minimum wage to be on a par with those in such liberal cities as Seattle, San Francisco and Los Angeles. But though the $4.50 jump from its current level might help a few workers, it would hurt many others, alongside consumers and businesses in some parts of the city.

On the surface, this might seem like a way to increase the standard of living for lower-income workers in the district, but in reality, the policy would most likely backfire. For instance, research by economists David Neumark of the University of California, Irvine, William Wascher of the Federal Reserve Board and Mark Schweitzer of the Federal Reserve Bank of Cleveland shows that minimum wages increase poverty — and hence poverty reduction shouldn’t be expected as a benefit of raising the minimum wage. That’s because, contrary to common belief, the relationship between low wages and poverty is extremely weak.

As Neumark — who has done extensive research on the issue — explains, “the principal sources of an individual’s higher earnings are more schooling and the accumulation of experience and skills in the labor market,” both of which are discouraged by increases in the minimum wage. Though an increase raises the wages of some people, it also reduces employment of young and low-skilled people. The Congressional Budget Office calculated that an increase in the federal minimum wage from its current level, $7.25 an hour, to $10.10 per hour would cost about 500,000 jobs.

The negative consequences are also worse when unemployment is high; hence, not all D.C. neighborhoods would be similarly affected. Economist Salim Furth of The Heritage Foundation explained to me: “It’s easy for the lobbyists and economists of D.C. to forget that a quarter of the city is very poor and poorly served by its government. A $15 (minimum wage) would raise prices in Georgetown, but in Congress Heights, it would shutter shops altogether.” Georgetown is in Ward 2, where the unemployment rate is below 5 percent. Congress Heights is part of Ward 8, where unemployment is 13.4 percent.

Furth said: “The people most likely to lose their jobs are those in professions where there is no successful business model that includes high wages. In D.C., 18,000 people work in professions where most workers earn less than $10 an hour. That includes parking lot attendants, shampooers and a lot of food service workers.”

Consumers would be affected, too, as businesses push the extra cost onto them. Considering how sensitive they are to price changes, it might further hurt employment.

Fast-food workers might stand to lose the most from the hike. Using peer-reviewed research, James Sherk, Furth’s labor economist colleague, estimates that a $15 minimum wage would cause a 36 percent drop in hours worked in fast-food chains. His estimate is based on a national average and is not restricted to a high-cost city such as D.C. He told me, “I would expect a smaller effect in D.C., as $15 an hour will be less of a proportionate increase than it will be in, say, Louisville, Kentucky.”

To make matters worse, Sherk explained, “a $15-an-hour minimum wage in D.C. would force many less skilled D.C. residents to look for work outside the city or not work at all.” He added, “Businesses will not pay workers more than the value they produce.”

As the debate about the effects of minimum wage policies continues, the evidence seems to point to their long-term negative consequences. But often, politicians don’t care. After all, when you raise the minimum wage, you can point to someone whose earnings just got a boost, whereas it is difficult to see the negative effects on workers who couldn’t get jobs or saw their hours cut because of the policy. Unfortunately, many D.C. residents could find themselves among the unseen victims if the voters approve this raise.

COPYRIGHT 2015 CREATORS.COM

Who We Are

The Patriot Post is a highly acclaimed weekday digest of news analysis, policy and opinion written from the heartland — as opposed to the MSM’s ubiquitous Beltway echo chambers — for grassroots leaders nationwide. More

What We Offer

On the Web

We provide solid conservative perspective on the most important issues, including analysis, opinion columns, headline summaries, memes, cartoons and much more.

Via Email

Choose our full-length Digest or our quick-reading Snapshot for a summary of important news. We also offer Cartoons & Memes on Monday and Alexander’s column on Wednesday.

Our Mission

The Patriot Post is steadfast in our mission to extend the endowment of Liberty to the next generation by advocating for individual rights and responsibilities, supporting the restoration of constitutional limits on government and the judiciary, and promoting free enterprise, national defense and traditional American values. We are a rock-solid conservative touchstone for the expanding ranks of grassroots Americans Patriots from all walks of life. Our mission and operation budgets are not financed by any political or special interest groups, and to protect our editorial integrity, we accept no advertising. We are sustained solely by you. Please support The Patriot Fund today!


The Patriot Post and Patriot Foundation Trust, in keeping with our Military Mission of Service to our uniformed service members and veterans, are proud to support and promote the National Medal of Honor Heritage Center, the Congressional Medal of Honor Society, both the Honoring the Sacrifice and Warrior Freedom Service Dogs aiding wounded veterans, the Tunnel to Towers Foundation, the National Veterans Entrepreneurship Program, the Folds of Honor outreach, and Officer Christian Fellowship, the Air University Foundation, and Naval War College Foundation, and the Naval Aviation Museum Foundation. "Greater love has no one than this, to lay down one's life for his friends." (John 15:13)

★ PUBLIUS ★

“Our cause is noble; it is the cause of mankind!” —George Washington

Please join us in prayer for our nation — that righteous leaders would rise and prevail and we would be united as Americans. Pray also for the protection of our Military Patriots, Veterans, First Responders, and their families. Please lift up your Patriot team and our mission to support and defend our Republic's Founding Principle of Liberty, that the fires of freedom would be ignited in the hearts and minds of our countrymen.

The Patriot Post is protected speech, as enumerated in the First Amendment and enforced by the Second Amendment of the Constitution of the United States of America, in accordance with the endowed and unalienable Rights of All Mankind.

Copyright © 2024 The Patriot Post. All Rights Reserved.

The Patriot Post does not support Internet Explorer. We recommend installing the latest version of Microsoft Edge, Mozilla Firefox, or Google Chrome.