Saturday, June 19

The Employment Policies Institute's Craig Garthwaite says,
The irony is that the minimum wage undermines welfare reform...

Following minimum-wage increases, employers often replace less-skilled employees with machines, or simply reduce the level of service to customers...

Employers also react to minimum wage hikes by replacing low-skilled adults with teenagers from high-income families, who are drawn into the job market by the better pay...

Low-skilled adults who are terminated because of a minimum wage increase lose more than their salaries; they also forfeit their federal earned income tax credits. These programs pay up to $4,000 tax-free to those on low incomes — provided they have a job.

Perhaps more important, employees who are let go also lose the opportunity to improve their skills and raise their wages as a result...

Sensible anti-poverty programs should provide the bulk of their benefits to the hard-working poor. But families living below the poverty line received just 17 percent of the benefits from the last minimum wage hike. Only a quarter of such increases go to the poorest fifth of families, while over a third goes to the richest two-fifths. "After all," President Clinton's first labor secretary, Robert Reich, admitted, "most minimum-wage workers aren't poor." Indeed, the average minimum-wage employee's family income is over $43,000.

By increasing the minimum wage, Congress would raise the bar even higher for less-skilled employees and welfare recipients, who struggle to find work at the existing minimum wage. That would cause many more to exchange their paychecks for welfare checks — for as long as those benefits last.
Of course, everything they say is against the minimum wage. But does that mean they're wrong?

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