Helping the rich get richer – Why raising the minimum wage causes maximum harm to the poor

Under the BusWhy shouldn’t teenagers living at home with their well-to-do parents get a raise?  Why shouldn’t highly paid union employees get a bump in pay? So what if poor people end up with no jobs, reduced hours and higher prices on basic goods and services?  Who cares as long as the rich keep getting richer and the poor get poorer?  Could you get behind this?  Could you support this effort?  No?

Well if you have bought into the big myth being peddled by the White House proposal to raise the minimum wage, you already have.  At first blush, the idea of putting more money into the pockets of the working poor seems like a good one. But raising the minimum wage isn’t the same as delivering more income to people with low-skill, low paid jobs.

Supporters of increasing the federal minimum wage would like you to believe that the typical minimum wage worker is struggling to raise a family on a single income. While this tugs at the heart strings, it simply is not true.  Most of the benefits of a minimum wage hike go to non-poor families. The average family income of workers who would ‘benefit’ from a minimum wage hike: $48,000.

According to recent U.S. Census Bureau data, fully 84% of employees whose wages would be increased by a minimum wage hike either live with their parents or another relative, live alone, or have a working spouse.  Only 16% are sole earners in families with children, and each of these sole earners has access to supplemental income through the Earned Income Tax Credit.

Furthermore, of that 16%, the many do not work full time or work fewer than 20 hours per week – a big problem when you consider that many small employers respond to minimum wage hikes by cutting hours or jobs. So much for helping the working poor.

One study found that only 10.5 percent of those benefiting from the proposal to raise the minimum wage would come from poor families.

But these people haven’t had a raise since 2009!  Minimum wage earners that really want to do better and improve themselves by learning job skills do not stay at minimum wage for very long.  Adjusted for inflation, the annual median wage growth for minimum wage workers is nearly six times higher than for workers earning above the minimum wage.

So if all this is true, then why would anyone support a minimum wage hike instead of proposing initiatives that would actually send help to the working poor where it is most needed?  The sad fact is that the supporters of a minimum wage hike have no shame about throwing the working poor under a bus if it serves a greater political purpose, in this case, deluding the working poor voting base to help their candidates do better at the ballot box. Not surprisingly, labor unions also have no problem supporting minimum wage hikes and using the working poor as a front to put inflationary pressure on the entire wage structure, a situation that benefits their bottom line.

Wages are more than just money; they are a unit of measure.  Jobs and careers are valued by the wages they pay. They guide workers to where they should go if they want to do better for themselves and their families. They measure and reward the value of reliability, education and skill.  To send a message to the working poor that the only way they are going to get a raise is if the government and politicians see fit to give them one is the greatest disservice done by those who purport to help them.

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About Charles Owens

Charles Owens has been advocating the interests of small business in the Michigan Legislature for over 25 years, beginning with his tenure at the Michigan Institute of Laundering and Dry-cleaning and currently with the National Federation of Independent Business / Michigan. As the State Director of one of Michigan's most respected small business organizations, Owens is responsible for directing the NFIB in its mission to maintain the viability of small business in the face of expanded legislative and regulatory challenges. Owens has been an active participant in the legislative debate over numerous landmark Michigan issues including: the Michigan Environmental Protection Act, inheritance tax, tort liability reform, Unemployment Insurance reform, Workers’ Compensation, and Michigan Occupational Safety & Health Act (MIOSHA) issues. Owens and the NFIB spearheaded the efforts of other small business groups in the fight for fairness and equity for small business in the debate over the repeal and replacement for the Michigan Business Tax. Owens is a 25 year member of the Capitol Club, a dedicated group of association executives committed to the advancement of legislative advocacy for their respective organizations. In 2005 he was elected by his peers to be President of the organization. In 2006, Owens was ranked as number five of the top ten single interest individual lobbyists in Michigan by Inside Michigan Politics. Under his leadership, NFIB was also ranked in the top twenty lobbyist organizations and top ten single interest lobbying organizations by the same publication. Originally a native of Rockford, Illinois, Owens graduated from Northern Illinois University with a Bachelors Degree in Finance and Business Administration. follow on twitter: @OwensNFIB
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One Response to Helping the rich get richer – Why raising the minimum wage causes maximum harm to the poor

  1. Pingback: The world this week and the weeks to come | Trutherator's Weblog

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