Congress must stop playing politics with low-skilled jobs
Research shows minimum wage hike would put low-skilled adults out of work and fail to effectively help poor families
Publication Date: August 2006
Topics: Minimum Wage
Washington, DC – Research commissioned by the Employment Policies Institute shows that a federal minimum wage hike is an ineffective anti-poverty tool that would cost low-skilled adults their jobs.
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 and the University of Connecticut found that a 10% increase in the minimum wage results in an 8.5% increase in unemployment for young African Americans and adults lacking a high school diploma.
Not only would a minimum wage hike jeopardize the jobs of low-skilled adults, but it is a grossly ineffective way to assist low-income families for the simple reason that most minimum wage earners come from families that aren’t poor. In fact, the average family income of those who would benefit from the hike is $45,500 a year.
Recent research from Cornell and the University of Georgia found that only 3.7% of the benefits from the proposed hike to $7.25 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.
“It’s shameful how Congress is scheming for political gain on this issue when so many entry-level jobs are on the line,” said Mike Flynn, EPI’s director of legislative affairs. “If this were about having a real impact on the lives of low-income families—instead of politics— lawmakers should be promoting an increase in the earned income tax credit, which has proven to be the best anti-poverty tool we have.”