Wage laws hurt vulnerable workers

Posted on August 21, 2009

Michigan’s unemployment rate has skyrocketed 88 percent from June 2008 to June 2009, yet some politicians are pushing a proposal that would cause additional job loss in the state (“More insanity from Democrats,” July 25). Passing additional minimum wage increases, while a popular political tool, will only hurt vulnerable, entry-level workers.

Wage increases – typically meant to alleviate poverty – fail to target those families who are most in need. Census Bureau data shows that only 16.5 percent of those who will benefit from the recent federal wage hike are raising a family on the minimum wage. The vast majority of minimum-wage earners are teens living at home (41 percent) and second-wage earners in a household (21 percent).
Research from Syracuse University shows that 83 percent of the benefits of a minimum wage increase went to families above the poverty line.

Decades of economic research show that wage increases cause job loss and do not effectively target poverty. Alternative policy options, including the Earned Income Tax Credit (EITC), which delivers 90 percent of its benefits to poor families without eliminating job opportunities for the most vulnerable workers, are a much better solutions for Michigan’s workforce.

Kristen Lopez Eastlick
Senior economic analyst
Employment Policies Institute
Washington, D.C.