Friday, October 10, 2014

Raising the floor: The epic conclusion (except I don't really conclude anything)

Characteristics of minimum wage workers
I wrote a lot about the projections of the CBO for what the minimum wage workforce will look like in 2016.  The BLS data on minimum wage workers is an extremely valuable resource for those who want to discuss the current minimum wage intelligently.  Some of the highlights include that workers who make exactly the minimum wage ($7.25/hour) or less now represents less than 5% of the total workforce.  The data is self-reported and is asked about their income.  Of course, many states have a state minimum wage above $7.25, as do cities, counties, and municipalities.  Because of that and my focus on workers who are earning below $11.50 for the most part, I did not include much of the data that was found in the report. 

This section will just give some more information on those working at exactly the minimum wage or lower.  All information can be found in the BLS data linked above.  About half of those who earn the minimum wage or lower are under 25.  5% of all women who are paid hourly wages make the minimum wage or less compared to 3% of men.  5% of all hourly paid Black workers, 4% of White workers and Latino workers, and 3% of Asian workers earned the federal minimum wage or less.  10% of hourly paid workers without a high school diploma earn minimum wage or less, 4% who have a high school diploma, and about 2% of college graduates do the same.

Conclusion

What are we to do in the face of all this knowledge?  One thing that we definitely will do is argue about raising the minimum wage while building strawmen because we like to do that.  The minimum wage is almost certain to be raised to $10 per hour at some point in the near future.  At some point in the future, we may see the minimum wage even be raised to $15/hour but that is more likely due to inflation and there are not bills on the horizon with this type of provision. 

I remain unconvinced by arguments by critics of the law that it would hurt work ethic to raise the wage, just as pay raises at other jobs do not hurt work ethic, there is not sufficient proof that this will happen.  I did not even address this in the post as I believe the very thought is laughable.
When discussing any policy, there are multiple things that you have to weigh, I do so with a utilitarian bent on most policy issues.  The evidence suggests that there will be a minimal job loss, minimal-moderate increase on consumer price, and a minimal loss of income for those making more than 6 times the poverty level.  For the last point, even if there was a substantial loss of income, I would still probably be ok with it as I believe in a larger redistributive society.  I believe all of that pales into comparison to lifting hundreds of thousands of families out of poverty, increasing educational opportunities for more people, and increasing real income for millions of individuals.  In my mind, I weigh it fairly favorably to raising the minimum wage.


Obviously, raising the minimum wage is not going to be a cure-all for poverty and I don’t believe that anyone is suggesting that.  In my ideal world, we would have an increased Earned Income Tax Credit (EITC) and we would expand it to include more individuals.  Additionally, we would spend more state funding on both two-year public universities and for four year public universities.  As everyone suggests, the best way to avoid poverty is to increase educational opportunities.  Unfortunately, many state budgets have been slashed much to the detriment of four-year and two-year public universities.  I have written about the scourge of for-profit universities who have worked to take their place, in the past.  I believe that the expansion of the EITC in both the amount that is paid out and who it goes to is critical, as well.  If I had to bet on one or the other to happen, it would be on an increased and expanded EITC.  

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