James Sherk, a policy analyst in the Center for Data Analysis at The Heritage Foundation, writes:
To succeed in helping people, one must understand who they are. Advocates of a higher minimum wage assume that minimum-wage earners are poor. In most cases, this simply isn’t true.
Contrary to congressional rhetoric, the typical minimum-wage earner is a suburban teenager or a college student working part time, not the sole breadwinner for a family. Most minimum-wage workers live in middle-class households that boast annual combined incomes in excess of $40,000. Most are under age 25, and three-fifths are part-timers.
These demographic realities make minimum-wage hikes an ineffective tool for fighting poverty. Most benefits flow to middle- and upper-middle-class households, simply because that’s where most minimum-wage earners live. Additionally, because most of the jobs are part-time, the increased rate is not enough to lift those who are among the working poor out of poverty.
Raising the minimum wage is also unnecessary if Congress wants to give low-wage workers a boost. Workers start at the minimum wage, but they do not stay there.Minimum wage jobs are entry-level positions. They are designed to be filled by low-skilled workers. These workers earn lower wages because their lower skills make them less productive. But minimum-wage jobs provide much more than wages. They also give low-skill workers the opportunity to acquire the experience and skills that will make them more productive and, hence, more valuable as employees. Skills like how to interact with customers and co-workers, or the improvements that come from actual experience on the job can only be learned by actually doing them.
As entry-level workers acquire these skills and experiences, they earn raises for themselves. Two of every three minimum-wage workers earn at least one raise within a year — and the raises keep coming after that. They don’t need the government to step in and force the issue. The minimum-wage job itself is, for most Americans, the first step on a long and successful career path. These jobs equip workers with the skills they need to attain upward mobility and higher-paying positions — without government intervention.
Raising the minimum wage reduces the availability of these starting positions. Why would a business pay an unskilled worker $7.25 an hour if it can hire a more skilled worker for the same amount? If it must pay the same wages, the company will always try to hire the more productive employees.
Raising the minimum wage artificially raises the first rung on the career ladder. Rather than give poor, unskilled workers “a leg up” out of poverty, it moves the first rung beyond the reach of many.
Raising the minimum wage creates winners and losers. Some workers, including large numbers of middle and upper-middle class teenagers, will see a nice bump in their paychecks. But many unskilled workers — those who see their hours cut back or do not get jobs in the first place — will have little to cheer about.
Those truly interested in helping the working poor have far more effective tools at their disposal — earned income tax credits, for example. For far too many, a minimum-wage hike will only saw off the bottom rung of the career ladder that leads to upward mobility and, ultimately, prosperity.
The full article can be found here.
Heritage Foundation is a partisan PAC. These numbers fly in the face of all of the research I haveread regarding minimum wage.
This is from the non-artisan Economic Policy Institute whom i believe you have cited many times.
http://www.epinet.org/content.cfm/issueguides_minwage_minwagefacts
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Last updated August 2006
A minimum wage increase would raise the wages of millions of workers.
An estimated 14.9 million workers (11% of the workforce) would receive an increase in their hourly wage rate if the minimum wage were raised from $5.15 to $7.25 by 2008. Of these workers, 6.6 million workers (5% of the workforce) currently earn less than $7.25 and would be directly affected by an increase. The additional 8.3 million workers (6% of the workforce) earning slightly above the minimum would also be likely to benefit from an increase due to “spillover effects”.
Minimum wage increases benefit working families.
The earnings of minimum wage workers are crucial to their families’ well-being. Evidence from an analysis of the 1996-97 minimum wage increase shows that the average minimum wage worker brings home more than half (54%) of his or her family’s weekly earnings.
An estimated 1,395,000 single parents with children under 18 would benefit from a minimum wage increase to $7.25 by 2008. Single parents would benefit disproportionately from an increase — single parents are 9% of workers affected by an increase, but they make up only 7% of the overall workforce. Approximately 3.9 million parents with children under 18 would benefit.
Adults make up the largest share of workers who would benefit from a minimum wage increase: 80% of workers whose wages would be raised by a minimum wage increase to $7.25 by 2008 are adults (age 20 or older).
Over half (54%) of workers who would benefit from a minimum wage increase work full time and another third (30%) work between 20 and 34 hours per week.
Minimum wage increases benefit disadvantaged workers.
Women are the largest group of beneficiaries from a minimum wage increase: 59% of workers who would benefit from an increase to $7.25 by 2008 are women. An estimated 14% of working women would benefit directly from that increase in the minimum wage.
A disproportionate share of minorities would benefit from a minimum wage increase. African Americans represent 11% of the total workforce, but are 16% of workers affected by an increase. Similarly, 14% of the total workforce is Hispanic, but Hispanics are 19% of workers affected by an increase.
The benefits of the increase disproportionately help those working households at the bottom of the income scale. Although households in the bottom 20% received only 5% of national income, 38% of the benefits of a minimum wage increase to $7.25 would go to these workers. The majority of the benefits of an increase would go to families with working adults in the bottom 40% of the income distribution.
Among families with children and a low-wage worker affected by a minimum wage increase to $7.25, the affected worker contributes, on average, over half (59%) of the family’s earnings. Forty-six percent of such workers actually contribute 100% of their family’s earnings.
Relatively large shares of the workforce (up to 19.1%) in some Southern and Mid-Western states would benefit from an increase to $7.25.
A minimum wage increase would help reverse the trend of declining real wages for low-wage workers.
Since September 1997, the purchasing power of the minimum wage has deteriorated by 20%. After adjusting for inflation, the value of the minimum wage is at its lowest level since 1955.
Wage inequality has been increasing, in part, because of the declining real value of the minimum wage. Today, the minimum wage is 31% of the average hourly wage of American workers, the lowest level since the end of World War II.
A minimum wage increase is part of a broad strategy to end poverty.
As welfare reform forces more poor families to rely on their earnings from low-paying jobs, a minimum wage increase is likely to have a greater impact on reducing poverty.
A recent study of a 1999 state minimum wage increase in Oregon found that as many as one-half of the welfare recipients entering the workforce in 1998 were likely to have received a raise due to the increase. After the increase, the real hourly starting wages for former welfare recipients rose to $7.23.
The federal Earned Income Tax Credit (EITC) combined with the minimum wage helps to reduce poverty, but the EITC is not a replacement for a minimum wage increase. For example, in 1997, a single mother of two children working 40 hours per week year-round at the minimum wage would have earned $9,893 (after Social Security and Medicare taxes) and would have been eligible for the maximum EITC of $3,656, which would have put her family income at $13,549, a mere 5% above the 1997 poverty threshold of $12,931 for a family of three. But because the minimum wage has not kept up with increases in the cost of living since 1997, the same family is now below the poverty line. In 2005, a single mother with two children would have combined earnings and EITC of $14,177, or 11% below the 2005 poverty threshold of $15,735 for a family of three.
The minimum wage raises the wages of low-income workers in general, not just those below the official poverty line. Many families move in and out of poverty, and near-poor families are also beneficiaries of minimum wage increases.
The inflation-adjusted value of the minimum wage is 30% lower in 2006 than it was in 1979.
The effect of the last minimum wage increase in 1996-97 has been completely eroded by inflation.
$5.15 today is the equivalent of only $3.95 in 1995 — lower than the $4.25 minimum wage level before the 1996-97 increase.
There is no evidence of job loss from the last minimum wage increase.
A 1998 EPI study failed to find any systematic, significant job loss associated with the 1996-97 minimum wage increase. In fact, following the most recent increase in the minimum wage in 1996-97, the low-wage labor market performed better than it had in decades (e.g., lower unemployment rates, increased average hourly wages, increased family income, decreased poverty rates).
Studies of the 1990-91 federal minimum wage increase, as well as studies by David Card and Alan Krueger of several state minimum wage increases, also found no measurable negative impact on employment.
New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. These models recognize that employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.
A recent Fiscal Policy Institute (FPI) study of state minimum wages found no evidence of negative employment effects on small businesses.
I don’t doubt that there will be some winners in the minimum wage, my point here is that there will also be losers, and those losers would tend to be the ones who we would want to help most - poor, minority, and least educated.
As far as stats go, why go through the middle man, we should instead look directly at government stats, here.
Oh, and btw, there is no way that the Economic Policy Institute could be considered non-partisan - it is as leftist as they come. This is what Wiki has to say:
If you recognize the names, you will see that some of them are the whose who of liberal economists. Robert Reich, remember, was secretary of labor under President Bill Clinton.
Also, Wiki concludes with this:
Ahh, I knew I smelled union bias. If there is one group of people that clearly benefit from the minimum wage it is unions (granted, at the expense of poor minority non-union workers, but hey, when have unions cared about them?). So the report of theirs cannot be called anything but biased.
Dr. Williams explains how different people, with similar goals but different logical thought processes, can reach such diametrically opposite conclusions:
Here!
In looking at the actual data, the Heritage Foundation is drawing assumptions on the stats that can not be made unless therewas more data.
“Contrary to congressional rhetoric, the typical minimum-wage earner is a suburban teenager or a college student working part time, not the sole breadwinner for a family.”
From the statsitics given it can only be determined that the majority is 16-25 this does not tell if they are still in school. Many people under 25 are no longer in school and many do not have the opportunity to go to college. Nowhere in the data given does it give their family income, nor if they have other family members working or if they are urban or suburban or rural, I do not see the source of this data supporting his hypothesis. As far as part time, read the definition of part-time carefully, it list the hours on primary job it does not factor in if they are working a second job to supplement their earnings. It also does not list if they have dependents. They are making assumptions that are not in the BLS numbers to make their point.
I am pretty sure that is because they are using more than just the simple U.S. Department of Labor statistics. James Sherk is a policy analyst in the Center for Data Analysis, this is what he does for a living.
He probably took some important characteristics, i.e. their age, the industry they work in, where they live, and from that used some sort of statistics given these age groups, these industries, and the part of the country they live in to derive the percentages that are college students and who only work part time. Actually, he probably used something even more rigorously academic than this, but that is definitely where I would start.
Either way, readers of the comment section can go to the U.S. Department of Labor statistics here, re-read what I wrote, and re-read what you quoted from the Economic Policy Institute and see which one seems to be the biased one. Because from my perspective, the Economic Policy Institute has the clear bias.
One last point on the Economic Policy Institute - one of the founders, Robert Reich, secretary of labor under President Bill Clinton, is known to be less than fully honest, see here, here, here,
and here.
This, with the addition of the comparisons above, show the Economic Policy Institute to be the partisan PAC, not the Heritage Foundation.
Name me one democrat in the Heritage Foundation.
The Heritage Foundation was less than truthful in the social security debate. Even Republicans reprimanded them.
See attached
http://www.cbpp.org/7-5-05socsec.htm
In 1998, the Heritage Foundation issued reports portraying Social Security as a bad deal for Hispanic Americans and African Americans and touting private accounts as a vastly superior alternative.[1] The reports rested upon severe distortions and misuse of data. In a series of striking and unusual developments, Stephen Goss, now Chief Actuary of the Social Security Administration, and Robert Myers, the former chief Actuary who for decades was the leading Social Security adviser to Congressional Republican leaders and served as Executive Director of the 1983 Greenspan Commission, issued analyses excoriating the Heritage reports for violating basic analytic standards.
In an analysis issued by the Office of the Chief Actuary, Goss wrote: “The [Heritage] approach consistently overstates the expected number of years of work and consistently underestimates the expected number of years [of benefits] after reaching retirement age. As a result, it grossly understates the expected rates of return from Social Security retirement benefits.”[2] Goss also noted that “by their [Heritage’s] own calculations…Hispanic Americans would be expected to receive a substantially higher rate of return from Social Security than would the general population, on average” but that Heritage had failed to acknowledge this finding in its report.[3] Myers’ critique of the Heritage reports, published in The Actuary magazine, was, if anything, even more damning. He described the Heritage Foundation results as “grossly in error due to faulty methodology.”[4]
I haven’t delved much into the hispanic and black social security debate, so I am not fully qualified to comment on that, but there is a difference between a study that gets its facts wrong - something that could of resulted from errors in research - and intentionally after the fact falsifying data.
The Heritage foundation, at its worse, is accused of the former, Robert Reich, one of the founders of the Economic Policy Institute, is accused of the latter. The two are still very much different, IMHO.
Shrek wrote this? What an ogre.
Just to clarify, your confusing the EPI mention in the article with the progressive one. The EPI mention inthe article is Employment Policies Institute; a industry-funded, Republican-linked think tank. EPI receives funding specifically from the fast-food and low-wage hospitality industry .IT is also owned by Berman and Company, which has strong ties to the Republican Party.