Poverty and the Minimum Wage
Mark Perry had this chart on the demographics of income distribution. From it, I want to draw a couple of conclusions about minimum wage and poverty
Note the household income per earner for the lowest quintile. It equates to something over $14 an hour, well above minimum wage almost everywhere in the US and nearly as high as the $15 national minimum wage proposed as an anti-poverty program.
The problem with most poor households is not wage rate, it is getting full time work. The household income per earner is nearly as high as the average income of the second quintile. The problem is that most poor households do not have full-time earners. The key stat is that only 16% worked full-time and only 30% had any sort of job at all.
This is what always amazes me about the minimum wage discussions. An increased minimum wage doesn't address the root problem of poverty at all, and in fact will tend to make it worse by pricing the 85% of the poor who need a job or need more hours out of the job market. If they can't find a job at $8, it is the purest insanity to think they will have a better chance with their limited skills of finding a job at $15.**
**Postscript: I suppose there is one set of facts that would lead to a minimum wage increasing employment in this lowest quintile: If people who don't work in this quintile are not seeking work because they are happy to live on government benefits and other sources of charity. This would imply that the reason they are not working full-time is not because no work is available but because they choose indolence. If this were the case, then a rising minimum wage would provide enough incentive, I suppose, for some to get off the couch and go to work. I am reluctant to buy into this explanation, but I am SURE that those on the Left who promote the idea of rising minimum wages increasing employment would not accept these assumptions.
