Raising the minimum wage may feel good, but don’t count on it to reduce poverty.
A town near Seattle may raise the minimum wage to $15 an hour. Massachusetts is debating raising the hourly minimum to $11. And in the nation’s capital, Senate Democrats are pushing a bill that could raise the federal minimum wage to $10.10.
… Less than a quarter of minimum wage workers live at or below the poverty line, while two-thirds come from families above 150 percent of the poverty line. In fact, the average family income of a minimum wage worker exceeds $53,000 a year.
How do workers making $7.25 per hour live in families making over $50,000 a year? Because most of them are not the primary income earner in their families—many are students. Over half of minimum wage workers are under 25, and better than three-fifths of those report being enrolled in school. Two-thirds of minimum wage employees work part time.
The larger problem facing poor families is a lack of employment opportunities. Only 9 percent of individuals in poor families work full time, while 25 percent work part time. Fully 67 percent do not work at all.
Raising the minimum wage would make this problem worse. Employers would respond to the higher costs by creating fewer entry-level jobs, making it harder for disadvantaged workers to gain the skills necessary to move into higher paying positions.
Raising the minimum wage would not reduce poverty rates.
A higher minimum wage would help some workers, but few of them are poor. The larger effect is hurting the ability of potential workers living in poverty to get their foot in the door of employment. A minimum wage hike might help politicians win plaudits from the press, but it wouldn’t reduce poverty rates.