Search This Blog


Raising minimum wage subverts intended purpose

An outstanding argument against raising the minimum wage was delivered by one of its recipients, underscoring that this increase should not happen in Louisiana.

The Advocate recently asked Gov. John Bel Edwards about whether he still champions the idea of the state adopting a law moving Louisiana higher than the federal level of $7.25 an hour. Through a spokesman, he confirmed he did.

For the story’s introductory material, it gave comments rendered by a woman who apparently once had worked for some time at minimum wage. At age 27, she had two children and tried to go to community college while working at that wage. She eventually had to quit attending and picked up an additional job. Apparently, she has moved on to a more prosperous station in life since.

Note that she represented an extraordinary outlier among the American workforce, atypical even of its minimum wage earners. As of 2013, fewer than three percent of workers earned that wage or lower, and a substantial portion of them below it had gratuity income that raised their total wage above the federal minimum. Further, only about half were over age 24 (those under 24 typically come from households well above the national income average), and of that half about two-fifths were single (the vast majority of those married had at least two incomes in the household). Of the older group as a whole, its average household income was almost twice the poverty line for a single adult, and just four percent are single parents with dependents.

If we assume about a third of all minimum wage earners also had sufficient income from tips, and the distribution of single parenthood is identical across age groups, this means this woman represented .016 percent of the American workforce, or one out of every 6,250 American workers. As a rule of thumb, general policy not addressing particular targeted groups, including wage policy, never should be made on the basis of such extreme cases.

Regardless, her commentary on her past wage history illuminates confusion. “The basic jobs that pay minimum wage, even now, there's no room for growth because you don't have extra finances to move yourself to something new," she said. "It leaves you in a stuck place.”

The last statement is particularly telling. Were you in a “stuck place” because society doesn’t artificially inflate enough the wage you earn, with the marketplace telling you this labor contributes relatively so little to society that only government fiat makes its wage as high as it is? Or is it because before age 27 you chose to have two children whose father(s) are no longer present for whatever reason and you chose to have the children with only a high school diploma, leaving you very few options to get ahead?

From the tone of the article, apparently eventually this woman did get ahead, proving exactly the point of a minimum wage: it exists not as a method to support a family, but as a vehicle to acquire experience in the workforce and as a motivational tool to get ahead. Given the extraordinarily generous nature of the American welfare system that asks little in return from its clients – a parent of two utilizing the typical pattern of programs accessed by such households in Louisiana (using 2013 data) gets an equivalent of $10.70 an hour, or almost 50 percent more than the minimum wage – at the current level the minimum wage more than serves its intended purpose.

Raising the minimum wage only would subvert its role in wage policy designed to maximum wealth and job creation for all. At this point, this understanding seems beyond Edwards’ grasp.

No comments: