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Are Minimum Wage Workers in WA, Nationally Really “Living in Poverty?”

Are minimum wage workers living in poverty?
(Photo by Justin Sullivan/Getty Images)

If you follow news with any regularity, you’ve heard the constant barrage of rhetoric from politicians about how Americans who make minimum wage are virtually living in poverty.  But the facts show that’s just not accurate!

Even President Obama has chimed in, according to Northwest news sources, he plans to call for a national raise in the wage to $10.10-per-hour, which would be nearly $3.00 more than where it is now. He is expected to raise that topic in his upcoming State of the Union Address.

According to extensive research from the Washington Policy Center released Wednesday of this week, here are some often overlooked facts about the minimum wage:

  • The Fair Labor Standards Act (FSLA) was first passed in 1938.  It was designed to protect workers from fluctuations in pay created by profitability of a business. Workers were often paid depending upon how much income the business generated.   The Act was passed to serve as a basic “safety-net” to ensure at least a reasonable minimum wage a worker could count on.  It was targeted towards unskilled, entry-level workers and not intended to provide wages to support an entire family.
  • 85% of minimum wager earners live with their parents or relative, live alone or have a working spouse.
  • Only 4% are single parents working full time.
  • 62% of minimum wage earners under the age of 25 are enrolled in school.

Many legislators and activists, including President Obama, have claimed thousands of families are struggling with a single-income minimum wage provider.  That also simply isn’t true:

  • Nationally, the average family income of a minimum-wage earner is $53,000 annually.
  • 94% of families who have an adult who works for minimum wage or less has a spouse who also works, making them a two-income household.
  • Nationally, in 8 out of ten families who have children, minimum wage income amounts to less than 20% of their household income.
  • Nationally, two-thirds of adults who are below the poverty line do not work at all.

Many legislators, including Gov. Inslee, claim raising the minimum wage helps the economy.  But dozens of studies have shown that is NOT the case. Again from the WPC, just a few of those results:

“A study from Ball State University found there were 550,000 fewer part-time jobs as a result of the 40 percent increase in the federal minimum wage between July 2007-July 2009.

A study of New Jersey’s minimum wage increase found that the higher wage resulted in reduced employment. An earlier study by David Card and Alan Krueger claiming that the increase created jobs was found to be based on a significantly flawed dataset.

Economists from Miami and Trinity University found the 2007-2009 increase in the federal minimum wage reduced teen employment by 6.9 percent.

Labor policy researchers at Cornell University found a 10 percent increase in the minimum wage caused four times more employment loss for employees without a high school diploma.

What happens when the minimum wage is raised?  Especially for mid-range to smaller businesses, they cannot afford to hire more workers, even if they have the need.  According to WA state officials, if Seattle raises the minimum wage for some 600 city workers to $15.00 an hour, it will cost the city an additional $700,000 alone annually.  Mayor Ed Murray has pledged he would get the wage that high citywide by the end of his term.  Worse still,  many businesses would not be able to afford raises, and could ultimately end up laying off workers.  That’s why the previous studies listed here show raising minimum wage has actually decreased employment in the demographics it was intended to help.

 

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