Minimum Wage Increase Won’t Help Low-income Workers

Published May 29, 2007

Dear Editor:

With Congress hiking the minimum wage from $5.15 to $7.25 an hour by 2009, employers will hire fewer entry-level workers, become more choosy in hiring, and replace workers with machines, as we see with the growing use of self-checkout at retail stores.

A national minimum wage is ludicrous, because costs of living vary so much from one location to another. Is $7.25 worth as much in New York City as in rural Mississippi?

Ironically, the chief beneficiaries of the minimum wage hike will not be low-income workers. As George Mason University economist Walter Williams has noted using U.S. Bureau of Labor Statistics data, “only 5.3 percent of minimum wage earners are from households below the official poverty line; forty percent of minimum wage earners live in households with incomes $60,000 and higher; and, over 82 percent of minimum wage earners do not have dependents.”

Steve Stanek ([email protected]) is managing editor of Budget & Tax News at The Heartland Institute.