Minimum Wage Hike Hasn’t Helped Poor

Posted on May 21, 2010

T.K. Somanath’s recent Op/Ed column, “Richmonders Achieve American Dream,” calls for attainable, safe housing for those who live in Richmond. But affordable housing isn’t helping to reduce poverty and unfortunately another strategy most popular among advocates — raising state and federal minimum wages — is also one of the least effective.

Recent Census Bureau data show that the average income of a Virginia family that benefited from the most recent federal wage hike was a whopping $71,000. The majority of minimum wage earners are middle-class teens living with their parents, or married couples where both spouses work. Because the majority of minimum wage earners don’t come from low-income families, higher minimum wages don’t translate to bigger paychecks for the poorer families that need them most. New research from economists at the University of Alabama and East Carolina University found that 85 percent of poor families received no benefit from the most recent increase in the federal minimum wage.

A better way to help low-income workers is the Earned Income Tax Credit (EITC). Targeted specifically at those with lower family incomes, an expansion of the EITC would have lifted 1.95 million Americans out of poverty — 2.5 times more than the 40 percent federal wage increase that took place between 2007 and 2009.

Michael Saltsman, Research Fellow
Employment Policies Institute, Washington