A month ago, my Facebook feed (which reflects the fact that many of my friends are Progressives) was suddenly overrun by a series of posters, all pointing out that minimum wage work is insufficient to support the cost of a two bedroom apartment. It’s unlikely that the new minimum wage laws that went into effect on January 1, 2016, in 14 states will change these charts:
Also, in a charming irony, that problem is worse in most blue states compared to most red ones, as you’ll see if you compare the two charts below:
There are three major bad ideas packed into the notion that minimum wage should be the Rolls Royce of salaries.
The first problem is basic economics: The reality is that a higher minimum wage benefits the few over the many:
Increasing the minimum wage is an inefficient way to reduce poverty, according to a Fed research paper that comes amid a national clamor to hike pay for workers at the low end of the salary scale.
David Neumark, visiting scholar at the San Francisco Fed, contends in the paper that raising the minimum wage has only limited benefits in the war against poverty, due in part because relatively few of those falling below the poverty line actually receive the wage.
Many of the benefits from raising the wage, a move already undertaken by multiple governments around the country as well as some big-name companies, tend to go to higher-income families, said Neumark, who also pointed to research that shows raising wages kills jobs through higher costs to employers.
On its face, then, the charts’ premise, which is that higher minimum wages will see everyone in better homes, is wrong.