Contrary to White House claims, independent studies show an increased minimum wage would have little or no effect on poverty and, in fact, suggest a detrimental effect on employment.
Surrounded by workers, President Barack Obama signs an executive order to raise the minimum wage for federal contract workers during a ceremony in the East Room of the White House in Washington, Wednesday, Feb. 12, 2014. Wage increase to $10.10 an hour, goes into effect next year, and applies to new contracts and replacements for expiring contracts. (AP/Jacquelyn Martin)
Among 28 states that increased their minimum wages from 2003 through 2007, it had no impact on poverty, according to the Southern Economic Journal.
When touting the merits of raising the minimum wage, President Barack Obama said Wednesday that 600 economists agreed in a letter to Congress that a wage hike would not harm employment.
But a 2007 study by the University of California, Irvine assessed studies for the last two decades about the impact of a minimum wage increase on employment.
“A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries,” the UC Irvine study stated.
The Obama administration and other Democrats supporting a minimum wage hike from $7.25 per hour to $10.10 per hour have repeatedly asserted there would be no impact on employment.
“It’s a shell game,” Michael Saltsman, research director at the Employment Policies Institute, told TheBlaze. “Over 20 years, 85 percent of the best studies show job loss after the minimum wage goes up. There may be a couple of scientists who still think the world is flat. That doesn’t mean it’s a consensus.”
And even when making its best economic case for a wage increase, some of the White House numbers seem less than impressive.
If the minimum wage were increased for $10.10 for the entire country, just 26.3 percent of those helped would be parents, according to the White House Council of Economic Advisers.
“The big change will be for people living at home with their parents,” Saltsman said. “This would possibly help teenagers and young adults in college. Primarily, the people put forward on this, single mothers or single fathers, make up just 10 percent.”
Married people with children make up 16.3 percent of the people who would benefit from the proposed minimum wage hike, according to the White House numbers, while 10 percent of single parents would benefit from the wage increase.
Obama on Wednesday signed an executive order to raise the minimum wage to $10.10 for all federally funded employees of federal contractors. Obama said the measure is to lead by example in a push to get Congress to approve a wage hike for the entire country.
Before signing the executive order, the president said the minimum wage in real purchasing power is 20 percent lower today than under the Reagan administration, and with no inflation adjustment, workers are getting a $200 pay cut each year.
“Raising the minimum wage is good for business, it’s good for workers and it’s good for the economy,” Obama said. "If you work full-time, you should not live in poverty.”
The Council of Economic Advisers stated that raising the wage would benefit 19 million directly and another 9 million through a “ripple effect.” It also said that that the United States ranks 12th among industrialized countries for a minimum wage. It predicted an increase from $7.25 to $10.10 would lift 2 million people out of poverty.
Along the age breakdown, the largest number of people to benefit – 10.4 million – is between 20 and 29, according to the White House numbers. The lowest demographic was actually under 20, at 3.4 million.
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