Minimum Wage Increase Will Do Little To Help Impoverished

Posted on January 19, 2011

A recent editorial suggests there’s a correlation between a state not increasing its minimum wage and more of its residents going hungry (“Some Pennsylvanians Going Hungry in 2011,” Jan. 4). That’s a provocative idea, but it doesn’t square with the facts.

According to data from the U.S. Census Bureau, the average family income of a minimum-wage earner in the Keystone State is over $45,000 a year. More than half of Pennsylvania’s minimum-wage earners are teenagers or others living with a parent or relative; only one in 10 are single parents with children.

These statistics explain why economists view raising the minimum wage as an ineffective way to help the working poor: Since minimum-wage earners are frequently living in non-poor families, a boost in the state minimum wage will do very little to help the poor make ends meet.

A wage hike that doesn’t reduce poverty is bad enough, but it also has the unintended consequence of pricing the least-experienced workers out of a job. Fortunately, better options exist. One recent study found that an expansion of the Earned Income Tax Credit could have raised 2.5 times more low-income workers out of poverty than the 40 percent increase in the federal minimum wage between 2007 and 2009.

MICHAEL SALTSMAN
Research Fellow
Employment Policies Institute
Washington, DC