Minimum wage: Another unfounded progressive belief

Minimum Wage, Maximum Ignorance

The core belief is simple, if we raise the minimum wage, none of these workers will be terminated, none of these workers will suffer reduced hours, but all minimum wage workers will be paid more.

​More after the break.

"Yet the actual benefits to workers might have been minimal, according to a group of economists whom the city commissioned to study the minimum wage and who presented their initial findings last week.

The average hourly wage for workers affected by the increase jumped from $9.96 to $11.14, but wages likely would have increased some anyway due to Seattle’s overall economy. Meanwhile, although workers were earning more, fewer of them had a job than would have without an increase. Those who did work had fewer hours than they would have without the wage hike.

Accounting for these factors, the average increase in total earnings due to the minimum wage was small, the researchers concluded. Using their preferred method, they calculated that workers’ earnings increased by $5.54 a week on average because of the minimum wage. Using other methods, the researchers found that the minimum wage hike actually caused total weekly earnings to drop — by as much as $5.22 a week. . .

If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase, workers’ total earnings could decline. . .

They attributed a wage increase of about $0.73 an hour for low-income workers to the minimum wage, and another $0.45 an hour to the improving economy. After the increase, Seattle’s workers got about seven more hours in a quarter. Workers’ hours increased even more in other parts of the state, however, leading the researchers to conclude that the minimum wage reduced the number of hours worked quarterly by 3.2, roughly 15 minutes each week.

Those figures do not include workers without jobs. The economists estimated that the minimum wage decreased the share of workers with jobs by about 1.2 percentage points."

Seattle commissioned a study on the effects of the minimum wage, and the economist could not decide whether workers had a $5.54 per week increase in wages, or a $5.22 decrease. But they did determine that the share of workers with jobs decreased by 1.2%, and it reduced hours by 15 minutes per week. 

Is this really the Gold Standard for helping workers struggling to raise families on the minimum wage? I suspect for a tiny fraction of the problems created by this change, we could expand the EITC and actually target the specific group, and not target quite so many middle class kids working after school.

But the goal never seems to be to actually solve the problem, but instead to "solve" the problem by regulation, which continues the problem, or even better worsens the problem. Both require more "salvation" regulations, which don't. Lather, rinse, repeat.