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Tuesday, March 05, 2013
Busting 5 Myths About the Minimum Wage
By Heritage Foundation @ 2:29 PM :: 3286 Views :: Labor, Cost of Living

Busting 5 Myths About the Minimum Wage

www.Heritage.org

When someone says “minimum wage,” what comes to mind?

Do you think of teenagers flipping burgers? Or a single parent trying to feed several kids?

While President Obama and other proponents of a higher minimum wage want you to visualize that single parent, the truth is that a burger-flipping teenager or college student with a part-time job paints a much more accurate picture of the minimum wage in America.

In his State of the Union address, President Obama called for an increase in the minimum wage from $7.25 to $9 an hour. Today, Democrats in Congress are arguing that the President didn’t go far enough, proposing an increase to more than $10 an hour.

Minimum-wage increases reduce the number of entry-level minimum-wage jobs available—actually hurting many of the workers proponents want to help.

And who are these workers?

The President and others keep going back to five key myths about minimum-wage workers. Heritage labor expert James Sherk has already debunked them all.

Myth #1: Hordes of Minimum-Wage Workers

Very few Americans are actually working for the federal minimum wage—it’s just 2.9 percent of all workers in the United States.

In other words, 97 percent of American workers make more than minimum wage.

Myth #2: The “Working Poor” Getting By on Minimum Wage

More than half of minimum-wage workers are between the ages of 16 and 24. These young people tend to work part-time, and a majority of them are enrolled in school at the same time—so the after-school burger flipper or college student with a part-time job is the real deal. A hike in the minimum wage primarily raises pay for suburban teenagers, not the working poor.

In fact, America’s poor aren’t the “working poor” at all. Sherk explains that “Contrary to what many assume, low wages are not their primary problem, because most poor Americans do not work for the minimum wage. The problem is that most poor Americans do not work at all.” Cutting down the number of entry-level jobs by raising the minimum wage surely isn’t going to help these people who need jobs.

Myth #3: Minimum-Wage Workers Trapped in Poverty

The average family income of a minimum-wage worker is more than $53,000 a year. How is this possible at $7.25 an hour? Few workers with minimum-wage jobs are the primary earners in their families. This is also true of older minimum-wage earners. Three-fourths of workers 25 and older earning the minimum wage live above the poverty line. In fact, 62 percent have incomes over 150 percent of the poverty line.

Myth #4: Lifelong Minimum-Wage Earners

Minimum-wage earners don’t stay in those jobs forever. It’s easy to get the idea from politicians that “minimum-wage workers” are a permanent class of people. But in fact, two-thirds of minimum-wage workers earn a raise within a year. As they gain experience and employment skills, they become more productive and can command higher wages. Entry-level, minimum-wage jobs are the first rung on many workers’ career ladders.

Myth #5: More Single Parents on Minimum Wage

Very few single parents are working full-time in minimum-wage jobs. Unfortunately, politicians overuse that example. A greater proportion of employees in the overall workforce (5.6 percent) are single parents working full-time jobs, while for minimum-wage workers that proportion is 4 percent—because so many minimum-wage workers are secondary earners.

Don’t be fooled by the myths. A minimum wage increase will not reduce poverty. Instead, it will hurt many of the workers its proponents want to help. As James Sherk and Rudy Takala sum it up:

A higher minimum wage would help some workers, but few of them are poor. The larger effect is hurting the ability of potential workers living in poverty to get their foot in the door of employment. A minimum wage hike might help politicians win plaudits from the press, but it wouldn’t reduce poverty rates.

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