Populist Pandering Wins Votes and Loses Jobs

Published July 26, 2007

Eliminating between 200,000 and 600,000 low-skill entry-level jobs would be an economic catastrophe for the poor. Raising the minimum wage could also end up costing employers $7 billion a year in additional payroll costs. Yet about 64 percent of those receiving the minimum wage aren’t adult child-rearing heads of households.

A Congressional Budget Office study from January 2007 states, “On the basis of data from the March 2005 CPS (Current Population Survey), about 18 percent of the 12 million workers who were paid an hourly wage rate between the federal minimum wage of $5.15 and $7.24 were in families that had a total cash income below the federal poverty threshold in 2004.”

That means 82 percent of minimum-wage earners were not from poor families. Most are children living at home or second-wage earners in their households.

Maybe the federal government should favor earned-income tax credits, not government-mandated wages, if they want to help subsidize the working poor. These tax credits provide needed dollars from federal and state governments but do not heap direct new costs on business payrolls.

Ralph W. Conner ([email protected]) is local legislation manager for The Heartland Institute.