Raising Minimum Wage Lowers Employment Rate

Posted on May 30, 2011

A new report claims that monthly rent payments remain out of reach for minimum-wage workers in New Jersey (op-ed, “Low-wage earners are out in the cold,” May 21). This is misleading; new research out of the University of Nevada-Reno shows that very few minimum-wage earners are the primary or sole breadwinner in their household.

For instance, the vast majority of adult minimum-wage earners with children have a spouse who also works and earns far more than the minimum — 63 percent of these spouses make more than $30,000 a year, with nearly half earning more than $40,000 a year.

Very few adult minimum-wage earners lack other sources of income (and those who do have access to government benefits such as the Earned Income Tax Credit). Paradoxically, raising the minimum wage in an attempt to help this small subset of workers can actually harm them; decades of economic research shows that artificially raising the cost to hire and train these employees may force employers to replace their job with an automated, self-service alternative.

Michael Saltsman,
Washington, D.C.
The writer is a research fellow for the Employment Policies Institute (EPIonline.org).