A map of US wages that suggests most Americans live in some sort of indentured servitude has gone viral.
Thankfully, the claim is easily debunked:
If that sounds bogus, it’s because it is.
Here’s why:
- Very few people who earn the minimum wage are living on that wage alone; a majority are working part-time, and live with a working spouse or in a family with an income far above the poverty line.
- Those who do earn just the minimum have access to additional income via policies like the Earned Income Tax Credit. (That’s especially the case for a family that would need the two-bedroom apartment misleadingly used as a benchmark in the chart above).
….Turns out, most people who earn the minimum wage aren’t living in poverty. In New York, for instance, the average family income of a person who would benefit from a hike in the state minimum wage is over $53,000 a year. Sixty percent are either living with family (e.g. a teen at home with their parents), or are second earners whose spouse also works.
By contrast, just over eight percent are single parents supporting children—families that qualify for up to about $7,500 in additional income from the tax credit mentioned above. They’re also eligible for a variety of other public programs.
Well-meaning attempts to help a small group of people by raising the minimum wage to $25 an hour (the amount needed to match the two-bedroom rental cost) would do nothing more than put a lot employers out of business—and put a lot of their employees out of a job.
That’s without broaching the impact of minimum wage on youth employment, hiring practices, and the like.
Labor laws have found a way to morph and destroy major facets of American industry — “infographics” like this one tap into the weaknesses of democracy, much like the Kony ad from earlier this year.
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Comments
The history of the minimum wage notion in the U.S. makes a fascinating study of BAD policy, driven by often VERY BAD motives.
You will find, for instance, the finger-prints of BIG UNION all over it. Why? Because it provides a rising floor above which the unions negotiate their premium wages.
Labor leaders also knew it would disparately effect minorities, and labor unions were…historically…awful racist organizations.
I have never been able to figure out how anyone who has taken (and presumably passed) Econ 101 can fail to see what mischief is wrought by minimum wage laws. I mean, they still do cover supply & demand, don’t they?
In econ 101 at U of Illinois so 35+ years ago, I asked the teacher (in class) if he was teaching us socialism instead of capitalism … he said yes. One other student “protested” meekly with me … But I’m sure things have gotten much worse since that.
Government meddling with wages brought us employer-paid health care – look how that worked out.
Was Uncle Milton for the minimum wage?
Scrapping it would go a long way towards teaching young people to negotiate with their bosses and teach them the importance of proving their worth and work ethic to managers and business owners.
Uncle Milt on minimum wages: http://youtu.be/ca8Z__o52sk
Thanks, s_dog!
I could watch his videos all day.
Ah, thanks for that video. Always good to see Uncle Milt explaining how things work.
It is too bad that the people who most need to see these explanations are the people most likely to ignore anything from Milt and listen instead to Krugman.
One of the recently-concocted “basic human rights” is the “right” to a job which pays a “living wage”.
Of course, if that means I have to pay the young bloke who sweeps out my warehouse after school enough money for him to go rent a 2-bedroom apartment in Sydney or Manhattan, guess what’s going to happen to either his job or to the prices of my goods?
This chart is so full of (censored) it steams in the sunshine. I have a child in one of the “70” states who is working part-time at minimum wage, while attending a Public University and living in an apartment in one of the higher rent cities in the state (but then again, it is the Midwest).
I recall an article last year about the impact of a miminum wage increase in Wisconsin. As an example, in late spring, “pick-your-own” strawberry patches employ temporary, seasonal labor. They liked to hire kids under 16 (I think 13-14 year olds)do to very simple tasks like stacking empty baskets at the gate for arriving customers. But the increase in mimimum wage forced them to hire more mature, productive workers. No knock on the young people – you can’t expect them to “multi-task” as well as more experienced workers. Anyway, bottom line, these places had to stop hiring these young people. Customers lost something – being greeted by friendly young motivated kids wanting to earn a little bit of spending money. And look what the young kids lost – the opportunity to earn some money within the limits of their abilities instead of sitting at home texting or doing Facebook or video games or whatever.
This question seems to come up about every couple of years..that somehow the minimum wage is “unfair” because of xyz.
The argument follows the same logic that asserts a lawnmower isnt good at vacuuming the bottom of swimming pools so therefore:
The fault is obvious. The minimum wage wasnt designed to solve some “living wage” issue.
Heritage has examined the issue for years and here is the latest response:
http://blog.heritage.org/2012/04/25/raising-the-minimum-wage-hurts-low-income-workers/
Then what was it designed for? It doesn’t seem to be good for anything.
WTF is “fair market rent”? Is that the equivalent of paying $850 instead of $900 per month because you’re a family of three earning less than $40,000/year? Doesn’t sound like much of a bargain. Especially given all of the federal state and local government forms you need to fill out and documentation you need to provide for what amounts to $600/year.
Gee, “Fair Market Rents”. What put rents & housing costs up as high as they are? In some areas (i.e., New York) it’s been blamed on rent control. In other areas, it’s been blamed on development costs, zoning practices & higher than needed construction standards.
Minimum wage laws hurt the poor in many ways. Here is a great post by my blogging buddy Capitol Commentary about $5 Footlongs no longer available in SF because of the city’s “living wage” laws:
http://capitolcommentary.com/2012/03/30/5-footlongs-no-longer-in-liberal-san-francisco/
They can always use the commercials for the Polk & Castro crowd!
While appeal to emotion may constitute a logical fallacy in argument, it is an extremely effective manipulative device.