“We know our economy’s stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong. 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.”- Barack Obama
Oh! The horror! The horror I say! Barack Obama’s demagoguery knows no bounds. This is just the latest example of emotional rhetoric from the Campaigner in Chief. Let’s look at some Obama kryptonite, i.e. data.Mark Perry, a University of Michigan economics professor and writer for the American Enterprise Institute, looked at the most recent information available on minimum wage workers from the Bureau of Labor Statitstics. This is what he found:
- In 2011, 99.4% of full time workers earned more than the minimum wage.
- 98.3% of hourly workers earned more than the minimum wage.
- Only 3.25% of workers over 25 were earning the minimum wage.
- 77.2% of teenage workers made more than the minimum wage.
Obama makes it sound like there are so many people barely getting by on the minimum wage when the evidence shows that almost 100% of workers make more than the minimum wage. My goodness, almost 80% of teenage workers make more than the minimum wage….
But what about the last part of Obama’s statement that implies that raising the minimum wage would pull people out of poverty? For information on that, we turn to a study by Joseph J. Sabia and Richard V. Burkhauser from the Southern Economic Journal . This study was conducted when politicians (Obama included) wanted the federal minimum wage to be raised to $9.50 an hour. This is what they concluded:
“Using data drawn from the March Current Population Survey (CPS), we find no evidencethat minimum wage increases between 2003 and 2007 lowered state poverty rates. Moreover,we find that the newly proposed federal minimum wage increase from $7.25 to $9.50 per hour,like the last increase from $5.15 to $7.25 per hour, is not well targeted to the working poor. Only 11.3% of workers who will gain from an increase in the federal minimum wage to $9.50 per hour live in poor households, an even smaller share than was the case with the last federal minimum wage increase (15.8%). Of those who will gain, 63.2% are second or third earners
living in households with incomes twice the poverty line, and 42.3% live in households with incomes three times the poverty line, well above $50,233, the income of the median household in 2007.3”
Let’s break this down. Consider an economy with 100 workers in which the minimum wage was raised from to $9.50 an hour (I know Obama just wants to raise it to $9 an hour but I’d wager that these stats would still be pretty accurate). Using the above information:
- 11 people would benefit
- Of these 11 people, 6 people are second or third earners in a household with incomes twice the poverty line
- 4 people would live in households with incomes three times the poverty level (above $50,233).
And that my friends leaves us with 1 person. One person out of 100 would benefit from an increase in the minimum wage in a household that is not above the poverty line. And that is assuming that this person still gets to keep their job. The study also found that:
“….we estimate that nearly 1.3 million jobs will be lost if the federal minimum wage is increased to
$9.50 per hour, including 168,000 jobs currently held by the working poor.”
Once again we have liberal do-gooder policy hurting the very people that they claim to represent.
Cross-posted at Rampartmedia.com