New Study Shows Minimum Wage Hike Would Put Low-skilled Missourians Out of Work
Adding insult to injury, over 80% of benefits would go to families that aren’t poor
Publication Date: August 2006
Topics: Minimum Wage
Washington, DC–A new study commissioned by the Employment Policies Institute (EPI) on the impact of Missouri’s ballot initiative to raise the minimum wage shows that not only would a hike put low-skilled adults out of work, but over 80% of the benefits would go to families that aren’t poor.
The study, conducted by labor economist Dr. David Macpherson of Florida State University, also found that the minimum wage hike would deliver a $44.4 million hit to Missouri businesses. The resultant job loss translates to $15 million in lost income for affected employees. Sadly, one-third of the over1,500 jobs lost will be those of families earning less than $25,000.
This study reaffirms decades of economic research showing that mandated wage increases are a blunt and ineffective means of assisting low-income employees because of the simple fact that most minimum wage earners aren’t poor. Specifically, Dr. Macpherson’s study shows that:
— 86% of employees that will benefit from the hike either live with their parents, are part of a dual earning household, or don’t have a family to support;
— The average family income of who will benefit is over $46,000 a year;
— 30% of the benefits would go to families with annual incomes over $60,000 a year;
— The mean net increase in income for families below the poverty level is only $23 a year.
“Minimum wage hikes are an ineffective anti-poverty tool and deliver a particularly harsh blow to the very people they are intended to help,” said John Doyle, EPI’s managing director. “A hike would not only cost jobs for Missourians with families to support, but over 45% of the benefits would go to teens living at home.”