In his State of the Union address, President Obama issued a
challenge: "Tonight, let's declare that in the wealthiest nation on
earth, no one who works full-time should have to live in poverty, and
raise the federal minimum wage to $9 an hour." On this he finds support
from Governor Cuomo, who proposes increasing the New York State minimum
wage because, among other things, it "reduces poverty."
Conservatives, of course, reject these proposed increases. Raising
the minimum wage, they insist, will kill jobs, especially low-wage jobs.
Commentator David Brooks made this claim on PBS immediately following
the State of the Union address.
And House Speaker John Boehner quickly tried to puncture the
president's proposal: "When you raise the price of employment, guess
what happens? You get less of it. At a time when American people are
asking, 'Where are the jobs?' why would we want to make it harder for
small employers to hire people?" Brooks and Boehner are pushing familiar
talking points: minimum-wage legislation has negative consequences and
there are better ways to address poverty.
As is frequently the case, our politicians and media analysts are
roundly mistaken. Consider the conservative reaction. Economists have
great difficulty establishing any significant negative relation between
modest increases in the minimum wage and declines in employment levels.
Moreover, the common claim that low-wage workers are typically
teenagers or are working part time – and so not "really" poor – is
misleading. Projections conducted by the Economic Policy Institute
regarding the impact of a higher federal minimum wage suggest a vast
majority of those affected would be over 20. A majority would be women.
Most would be working full time. And nearly 30 percent of those affected
would be parents.
Finally, conservatives often insist that targeted programs like the
Earned Income Tax Credit are a better way to alleviate poverty than
minimum wage legislation. This too is debatable. On the one hand, such
tax policies largely represent a hidden subsidy to employers who are
spared the burden of paying reasonable wages. On the other hand, they
might actually dampen wages because employers assume, often erroneously,
that their workers will be eligible for a tax break. For that reason
tax credits are better understood as complementing rather than replacing
minimum wage legislation.
If conservative skepticism seems merely to mask basic resistance to
government intervention, the Democratic case is overly optimistic. The
federal poverty level for a family of four was $23,050 for 2012.
Imagine, as President Obama suggests, we increase the federal minimum
wage from $7.25 to $9 an hour. That means a full-time minimum wage
worker would earn a gross annual income of $18,720. If she lives on her
own, this would sustain her above the federal poverty level for
individuals. But if the worker has a family, it obviously falls well
Our point is not that the president and governor are wrong to
recommend raising the minimum wage. Doing so, even to the levels being
proposed, can make many people better off. But doing so is quite
unlikely to propel many households out of poverty.
This hardly is an abstract complaint. It is directly relevant to
Rochester where, in 2011, the overall poverty rate stood at over 29
percent and where just over 43 percent of all children lived in poverty.
Raising the minimum wage can go some way to mitigating economic
hardship in the city. But it would be only a start. It is the least we
Susan Orr is assistant professor of political science at SUNY College
at Brockport. James Johnson is professor of political science at the
University of Rochester. They live in Hamlin.
Labels: political economy, poverty, Rochester