When House considers position on the minimum wage Friday, will they forget Econ 101?
Proposed wage hike would fail to target poor single mothers, jeopardize jobs
Publication Date: July 2006
Topics: Minimum Wage
Washington, DC – The House is expected to vote tomorrow on a proposal to raise the federal minimum wage to $7.25, and the Employment Policies Institute reminds lawmakers that mandated wage hikes are ineffective at reducing poverty and jeopardize low-skilled jobs.
Recent research from Cornell and the University of Georgia found that only 3.7% of the benefits from the House’s proposed hike would go to poor single mothers, and only 3.8% of the benefits would go to poor African American families. In contrast, over 87% of the benefits would go to families that aren’t poor.
Not only is a minimum wage hike an ineffective way to deliver assistance to poor families, but leading economic research continually confirms the fact that wage mandates jeopardize the jobs of low-skilled adults.
Separate studies from Duke, Michigan State, and Boston University all conclude that minimum wage hikes attract teenagers from wealthy families into the workforce, displacing low-skilled adults in the process. Cornell University found that a 10% increase in the minimum wage results in an 8.5% increase in unemployment for adults lacking a high school diploma.
“It’s unfortunate that lawmakers are using the minimum wage as a political chip this election season considering the overall ineffectiveness and unintended consequences of the policy,” said Mike Flynn, EPI’s director of legislative affairs. “Sixty years of economic research has shown us that low-skilled adults are the first to lose their jobs following a minimum wage hike.”