A higher minimum wage doesn’t reduce poverty, says… the federal government

posted at 5:31 pm on December 31, 2015 by Jazz Shaw

We reach the end of the year with yet another tale of crazy, one percenter wingnuts trying to claim that jacking up the minimum wage won’t do much to alleviate the issues facing the poorest Americans who the Democrats are seeking to help. This time the hateful claims are coming from… a study published by the federal government.

Increasing the minimum wage is an inefficient way to reduce poverty, according to a Fed research paper that comes amid a national clamor to hike pay for workers at the low end of the salary scale.

David Neumark, visiting scholar at the San Francisco Fed, contends in the paper that raising the minimum wage has only limited benefits in the war against poverty, due in part because relatively few of those falling below the poverty line actually receive the wage.

Many of the benefits from raising the wage, a move already undertaken by multiple governments around the country as well as some big-name companies, tend to go to higher-income families, said Neumark, who also pointed to research that shows raising wages kills jobs through higher costs to employers. Neumark is a professor of economics and director of the Center for Economics and Public Policy at the University of California, Irvine.

I’m sure that Hillary Clinton and Bernie Sanders will find a way to spin this story, as well as Ben Carson for that matter. (Rick Santorum too, now that we mention it.) But the numbers here really don’t come as any surprise when you stop to think about it. This report doesn’t deal so much with the employment impacts of a higher federal minimum wage, but more with who is getting those wages.

As the study shows, 57% of families currently below the poverty line have no members in the workforce, receiving all of their income from social welfare or entitlement programs combined with charity. A higher minimum wage has no effect on these families. Of the roughly 3 million workers who do receive the minimum wage, more than half are between the ages of 16 and 24 and are generally not the primary breadwinners in their households. Further, they found that among the families below the poverty line, nearly half (46%) are making more than the proposed $10.10 per hour already and more than one third (36%) are making 12 dollars per hour or more.

With those figures in mind, only a relatively small fraction of Americans living below the poverty line would see one extra red cent in their pockets with a higher federal minimum wage. And what can not yet be predicted is how many of those who did would be offset by the number of employers who would simply terminate unskilled labor positions to avoid the increased labor costs, moving to either more streamlined services or automation. And this is coming straight from the feds. How will the Fight for Fifteen folks and their pet Democrat candidates respond to this new information aside from abject denial? Oh, wait… the denial started already.

“The mainstream view, as illustrated by meta-surveys of the whole minimum wage research field, is that the job loss effects of raising the minimum wage are very, very small,” Paul Sohn, general counsel for the National Employment Law Project, said in an email to CNBC.com.

I’m sure the phrase “very small” will come as great comfort to the guy who loses his job operating the fry machine around the holiday season. But don’t let that bother you, guys. We’re from the government and we’re here to help.

LivingWage


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Comments

No shite but we feel better.

CWforFreedom on December 31, 2015 at 5:41 PM

Union bosses and their fat wallets love it.

CWforFreedom on December 31, 2015 at 5:43 PM

We reach the end of the year with yet another tale of crazy, one percenter wingnuts trying to claim that jacking up the minimum wage won’t do much to alleviate the issues facing the poorest Americans who the Democrats are seeking to help.
====================================================

Seeking to help,..its an OnGoing/NeverEnding
DNC Voter Drive!!

Happy New Year,…. Jazz—:)

canopfor on December 31, 2015 at 5:45 PM

A higher minimum wage doesn’t reduce poverty, says… the federal government

David Neumark, visiting scholar at the San Francisco Fed

This is a… badly mangled headline.

1.) The Federal Reserve is not strictly speaking a part of the Federal government.

2.) A visiting scholar is not exactly the same thing as a permanent employee.

Stoic Patriot on December 31, 2015 at 5:46 PM

The biggest problem with the term Poverty in America is that it does not mean what you think it means.
In America a person in poverty has a house, more than one car, air conditioning, cable tv and on and on and on.
Government benefits meant to alleviate poverty are not calculated into the incomes of people. Thus the war on poverty cannot be won this way, as even though they end up with enough resources to many times be equivalent to a $60,000 a year job, they are still considered to only be making what they earn through work.
Of course, all these goodies that raise a person’s equivalent income to higher than the national average wage is going to get those who are lazy as well as those who are below average to prefer to be on those programs so that they can live better, and best yet, no work. Thereby increasing the number of people in poverty by choice.
We also have insane people who simply cannot care for themselves who would rather live homeless than any other situation adding into the number of impoverished people. In a same society, these people would be housed in asylums against their will.

Constitutionalist on December 31, 2015 at 5:52 PM

Somewhat OT but not helping things…

New Year’s Surprise: Obama Regulation To Give Work-Permits To Foreign College-Graduates

Happy New Year to all the recent college graduates who can’t get jobs to payoff their loans. Cheaper skilled labor is coming.

H-1b visa quota too low for Obama’s liking? We’ll just give them green cards instead!

Oxymoron on December 31, 2015 at 5:52 PM

Also, from the paper itself:

Opinions expressed in FRBSF Economic Letter do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System. This publication is edited by Anita Todd. Permission to reprint must be obtained in writing.

Stoic Patriot on December 31, 2015 at 5:53 PM

This is a… badly mangled headline.

1.) The Federal Reserve is not strictly speaking a part of the Federal government.

2.) A visiting scholar is not exactly the same thing as a permanent employee.

Stoic Patriot on December 31, 2015 at 5:46 PM

It was published under the Federal Reserve umbrella with their blessing. I am fairly certain they blessed it before it got published.

Federal Reserve Bank of San Francisco

Badly mangled headline for sure, but still an authorized publication by the
Fed article.

Johnnyreb on December 31, 2015 at 5:53 PM

IMHO, the best way to fight poverty is with school voucher programs. This is the Republican party’s ticket into the black community.

FYI, Paul Ryan’s budget contained no funding for the DC school voucher program that Obama canceled in the first month of his Presidency.

Magicjava on December 31, 2015 at 5:56 PM

This is a… badly mangled headline.

1.) The Federal Reserve is not strictly speaking a part of the Federal government.

2.) A visiting scholar is not exactly the same thing as a permanent employee.

Stoic Patriot on December 31, 2015 at 5:46 PM

It was published under the Federal Reserve umbrella with their blessing. I am fairly certain they blessed it before it got published.

Federal Reserve Bank of San Francisco

Badly mangled headline for sure, but still an authorized publication by the
Fed article.

Johnnyreb on December 31, 2015 at 5:53 PM

The problem is that this particular publication is supposed to be more of a forum for academic research than an authoritative proclamation. When it’s:

1.) Not the government
2.) Not endorsed by the publication, and
3.) Not even written by someone permanently on staff at the Fed

…then all you can really say is, “The Federal Reserve Bank, which has a relationship with the Federal government, is willing to allow an outside researcher to publish a paper in their journal without necessarily endorsing its content.”

The research may be good, but for the HotAir article’s claim, that’s pretty weak sauce.

Stoic Patriot on December 31, 2015 at 5:57 PM

Yeah, but it does increase demand for off the books labor, automation and outsourcing of labor to foreign countries. It’s basically a home run, if your goal is keep low skilled Americans poor and dependent.

trubble on December 31, 2015 at 5:58 PM

I’m against illegal immigration but I saw something interesting today, people working in the rain to add a new roof..and my guess is that a lot of so celled potential workers (many on the govt tit now) would be nowhere to be found doing jobs like that.

celt on December 31, 2015 at 6:08 PM

That means it does reduce poverty but they don’t want you to see “the how”. If we kill the value of labor to push 95% of the population down to just north of the poverty line and set a minimum wage to bring the poorest 5% up to just north of the poverty line, you have ended poverty…and the middle class. It’s a dream of both establishments; the feudalist Republicans and the communist Democrats.

The catalyst is the importation of cheap labor and cheap imports. I’ll put that together a little better next time to show the relationships between the moving parts.

Buddahpundit on December 31, 2015 at 6:10 PM

I guess they must have used all the Federal supercomputers to figure that out.

DarkCurrent on December 31, 2015 at 6:12 PM

Where’s my free stuff?

Galtian on December 31, 2015 at 6:13 PM

Maybe the illegals are doing jobs that POS government slackers won’t do?

You can’t have an entitlement society and open borders IMHO..because once you make illegals qualified for sitting on ass like so many citizens, you lose these benefits.

celt on December 31, 2015 at 6:13 PM

We also have insane people who simply cannot care for themselves who would rather live homeless than any other situation adding into the number of impoverished people. In a same society, these people would be housed in asylums against their will.

Constitutionalist on December 31, 2015 at 5:52 PM

The one homeless guy we had in Green Bay while I was growing up was actually a millionaire who preferred to live on the street. I recall his family trying to commit him on several occasions, but he was always deemed sane. Guess he just preferred the streets to anything else….

smokeyblonde on December 31, 2015 at 6:19 PM

Welfare contributes more to poverty than anything else.

they lie on December 31, 2015 at 6:19 PM

As the study shows, 57% of families currently below the poverty line have no members in the workforce, receiving all of their income from social welfare or entitlement programs combined with charity.

The democrat base defined.

WryTrvllr on December 31, 2015 at 6:20 PM

“All you Americans are fired.”

smokeyblonde on December 31, 2015 at 6:20 PM

I guess they must have used all the Federal supercomputers to figure that out.

DarkCurrent on December 31, 2015 at 6:12 PM

No, seriously, are they? :-)

WryTrvllr on December 31, 2015 at 6:21 PM

If the majority of the federal workers were replaced by illegal immigrants and H!B visa foks, you would see a big democrat loss and a 57 state sweep by Trump. Those gubmint welfare workers would be squealing like a stuck hawg.

they lie on December 31, 2015 at 6:21 PM

no s%%t sherlock, I this quite a few members of this blog have said that time and time again.

RonK on December 31, 2015 at 6:24 PM

Welfare contributes more to poverty than anything else.

they lie on December 31, 2015 at 6:19 PM

Uniparty groupthink that eschews morality while appealing and glorifying our basest animal instincts is the problem.

In a just society, welfare and charity is temporary and helpful and done with love to truly the help the recipient. Today’s welfare is merely the newest form of slavery and subjugation of the mind, body, and spirit to government while instilling contempt towards those actually paying for it. A sick, twisted, evil system.

smokeyblonde on December 31, 2015 at 6:24 PM

Damn but I need to lighten up today! :)

smokeyblonde on December 31, 2015 at 6:25 PM

Democrats should ask Brazil how well downward-directed wage increases are working out for them.

flipflop on December 31, 2015 at 6:25 PM

Them darkies sho do luuuv dem sum gubmint subsidies

nonpartisan on December 31, 2015 at 6:28 PM

Damn but I need to lighten up today! :)

smokeyblonde on December 31, 2015 at 6:25 PM

You’re scaring me..er, not!

celt on December 31, 2015 at 6:29 PM

Them darkies sho do luuuv dem sum gubmint subsidies

nonpartisan on December 31, 2015 at 6:28 PM

You sound like the black guy burning down his own black churches for effect..is that you?

celt on December 31, 2015 at 6:31 PM

Them darkies sho do luuuv dem sum gubmint subsidies
.
nonpartisan on December 31, 2015 at 6:28 PM

.
You’re preachin’ to the choir, here … oh, wait … it’s YOU!

When did you leave “the dark side?”

listens2glenn on December 31, 2015 at 6:31 PM

Them darkies sho do luuuv dem sum gubmint subsidies

nonpartisan on December 31, 2015 at 6:28 PM

Huh?!? Who are you and what have you done with the uber-PC NP?

smokeyblonde on December 31, 2015 at 6:31 PM

Them darkies sho do luuuv dem sum gubmint subsidies

nonpartisan on December 31, 2015 at 6:28 PM

Darkies? You mentioning race?

WryTrvllr on December 31, 2015 at 6:33 PM

Lol. Jazz doesn’t understand the difference between “the fed” and the federal government. Amateur hour at hotair.

themuppet on December 31, 2015 at 6:37 PM

For the Texas peeps:

Charlie Robison – New Year’s Day

Fallon on December 31, 2015 at 6:41 PM

There is no way to end poverty in this country. There is too much money involved. Congress will not give up this cash cow. It’s too easy to steal from all of the programs.

docflash on December 31, 2015 at 6:42 PM

Lol. Jazz doesn’t understand the difference between “the fed” and the federal government. Amateur hour at hotair.

themuppet on December 31, 2015 at 6:37 PM

LOL! The Fed essentially owns the government by monetizing the .gov debt! The federal government is essentially owned by a bunch of private financial institutions! The Fed Just Gave The Treasury A Record $19 Billion Holiday Bonus

It is indeed amateur hour, but in the way you intended …

smokeyblonde on December 31, 2015 at 6:43 PM

Many of the benefits from raising the wage, a move already undertaken by multiple governments around the country as well as some big-name companies, tend to go to higher-income families

I say raise it to $100 bucks an hour.

HonestLib on December 31, 2015 at 6:45 PM

Them darkies sho do luuuv dem sum gubmint subsidies

nonpartisan on December 31, 2015 at 6:28 PM

You’re right. They should all be on plantations. Oh wait,they already are.

docflash on December 31, 2015 at 6:45 PM

docflash on December 31, 2015 at 6:42 PM

Lots of wealth in poverty.

HonestLib on December 31, 2015 at 6:46 PM

OT-

The Black Lives Matter (aka we hate white people) movement is going to flood DC’s Chinatown for New Years Eve. It will be interesting to see if they actually muster enough thugs to thwart the nightclub crowd or whether productive people will just see a bunch of glowering parasites who would rob them in a heartbeat were there not so many people around.

Happy Nomad on December 31, 2015 at 6:47 PM

Lol. Jazz doesn’t understand the difference between “the fed” and the federal government. Amateur hour at hotair.

themuppet on December 31, 2015 at 6:37 PM

Right?!?! The Fed’s policies are designed to make Obola look good whereas the .GOV’s….not so much.

WryTrvllr on December 31, 2015 at 6:47 PM

Them darkies sho do luuuv dem sum gubmint subsidies

nonpartisan on December 31, 2015 at 6:28 PM

Hero.

HonestLib on December 31, 2015 at 6:47 PM

Happy Nomad on December 31, 2015 at 6:47 PM

Have a Happy New Year HN.

HonestLib on December 31, 2015 at 6:48 PM

Hero.

HonestLib on December 31, 2015 at 6:47 PM

Nice knowing ya, HL! Say hi to davidk on the other side … :(

smokeyblonde on December 31, 2015 at 6:49 PM

Wall Street JournalVerified account
[email protected]
Breaking: White House delays imposing new financial sanctions on Iran http://www.wsj.com

d1carter on December 31, 2015 at 6:50 PM

I’m against illegal immigration but I saw something interesting today, people working in the rain to add a new roof..and my guess is that a lot of so celled potential workers (many on the govt tit now) would be nowhere to be found doing jobs like that.

celt on December 31, 2015 at 6:08 PM

Get rid of welfare and it becomes work or starve, you will see them doing more.

Constitutionalist on December 31, 2015 at 6:51 PM

Hero.

HonestLib on December 31, 2015 at 6:47 PM

Nice knowing ya, HL! Say hi to davidk on the other side … :(

smokeyblonde on December 31, 2015 at 6:49 PM

I don’t care!

HonestLib on December 31, 2015 at 6:53 PM

Get rid of welfare and it becomes work or starve, you will see them doing more.

Constitutionalist on December 31, 2015 at 6:51 PM

As it should be …

I’m not knocking people truly in need through crappy circumstances or through some sort of physical or psychological issues and who we are morally required to help; but all the slackers without a job but who have the newest fashions and iPhones and all the bling they can lay their hands on.

smokeyblonde on December 31, 2015 at 6:55 PM

I don’t care!

HonestLib on December 31, 2015 at 6:53 PM

How very liberal of you, thinking only of yourself!

What about the rest of us, huh? Just thrown out like holey, skid-marked underwear?

smokeyblonde on December 31, 2015 at 6:57 PM

smokeyblonde on December 31, 2015 at 6:57 PM

Bah, the only time I have been missed was the one time the alimony and child support payments were late by 20 minutes.

HonestLib on December 31, 2015 at 7:02 PM

Have a Happy New Year HN.

HonestLib on December 31, 2015 at 6:48 PM

Same to you HL!

Happy Nomad on December 31, 2015 at 7:07 PM

Bah, the only time I have been missed was the one time the alimony and child support payments were late by 20 minutes.

HonestLib on December 31, 2015 at 7:02 PM

True, none of us were ever married to you … :)

smokeyblonde on December 31, 2015 at 7:11 PM

There should be a moratorium on bringing in new immigrants and an end to illegal immigrants working under the table in the U.S. to bring up the minimum wage or wages for certain jobs thru market forces. There needs to be more jobs than people, for employers to have to entice workers with higher pay; there needs to be a scale of pay for increasingly more difficult jobs instead of the boss knowing he can fire you and another one will pop up in your place if you refuse to do the work others are not doing or if he wants you to do his work too for your crappy minimum wage.

We need fewer entry level workers at this time. We don’t need immigrants to fill these jobs, and we also do not need foreign specialists that drive down American wages in the professions. With the simplist ingenuity, American born workers can be trained by their current employers for higher level work.And employers can offer graduate school as an incentive to our young adults with student loans to pay. The reason FOREIGN workers come for the professions is that someone else is paying for their graduate degree, and they don’t have student loans because scholarships in foreign countries are based on Merit Entrance, not on social engineering that says it would be nice if kids with bad grades can take all the courses they need to be doctors and lawyers, and magically Morph into intelligent professionals.

Fleuries on December 31, 2015 at 8:25 PM

Minimum wage has nothing to do with poverty. It has everything to do with raising the pay scales of union contracts, which use the federal minimum wage as a base to which multiples are applied.

If a union worker is making 3x the minimum wage, say at $7.50, he’s making $22.50/hour. Raising the minimum wage to $15.00 that same guy is now making $45.00 an hour.

Not bad, eh?

BobMbx on December 31, 2015 at 8:35 PM

Fleuries on December 31, 2015 at 8:25 PM

LOL! Now please excuse me while I ride my unicorn to the neighborhood BATF store for government-subsidized beer and cigs and a new Glock and free ammo!

smokeyblonde on December 31, 2015 at 9:16 PM

Rebuttal to the publication:
“No s**t, Sherlock “.
Anything more extensive would needlessly complicate the answer.

orangemtl on December 31, 2015 at 9:30 PM

Them darkies sho do luuuv dem sum gubmint subsidies

nonpartisan on December 31, 2015 at 6:28 PM

Absolute PROOF that nonpee is a sock. If I said that word, I’d be banned.

fossten on December 31, 2015 at 9:55 PM

I always like the stories of people making minimum wage asking their employers to cut their hours when minimum wage is increased because it will take them over the limit for getting government hand outs.

Ruckus_Tom on January 1, 2016 at 1:21 AM

“David Neumark, visiting scholar at the San Francisco Fed, contends in the paper that raising the minimum wage has only limited benefits in the war against poverty, due in part because relatively few of those falling below the poverty line actually WORK.

FIFH

AppraisHer on January 1, 2016 at 3:43 AM

The “Fed” is not part of the Federal Government. Just sayin – the headline is not correct. The Fed is a private bank.

koparosti on January 1, 2016 at 8:55 AM

Listening to clips of the Prezie’ s New Years address re “gun safety” EA’s…..I’m not joining him in ANYTHING other than getting his butt out of our WH. I have been around since Truman was in the WH (granted I don’t remember much about him), this person is the most destructive, divisive President we have had. This $15 min. wage thing is no doubt his brainstorm.

Iamaluckyone on January 1, 2016 at 10:16 AM

With those figures in mind, only a relatively small fraction of Americans living below the poverty line would see one extra red cent in their pockets with a higher federal minimum wage.

C’mon, Jazz, you have better economic sense than that. A raise in the minimum wage will eventually push ALL wages up. Which means the economic effects will be to push people out of jobs at a lot of levels in the workforce – not just that fry cook. And, then, since everyone’s pay went up, all the prices will go up – nullifying the wage increase due to inflation.

Minimum wages don’t help ANYONE* in the long run.

(* Except the political class, of course. They benefit greatly from the false feelings of hope generated by the increase, and the ensuing need for more gov’t to take care of all those people adversely affected.)

BTW, if there’s any fast food place that will benefit from automation, it’s Taco He11 Bell. Watching them work, it is exactly like an assembly line. They would need a monitor to replace the sour cream can in the grease gun (yes, they use a grease gun to dispense the sour cream, and the sour cream comes in a great big can like caulking) when it’s empty, but that’s about it.

GWB on January 1, 2016 at 10:36 AM

We reach the end of the year with yet another tale of crazy, one percenter wingnuts … the federal government.

Those things are not actually exclusive. Most of our elected legislators are pretty well-off, and gov’t bureaucrats are currently paid better than their counterparts in private business (when counting benefits). The folks in DC are exceptionally well paid.

GWB on January 1, 2016 at 10:39 AM

…pointed to research that shows raising wages kills jobs through higher costs to employers. Neumark is a professor of economics and director of the Center for Economics and Public Policy at the University of California, Irvine.

What the hell does he know?!

$50 an hour – or bust! /

Hill60 on January 1, 2016 at 10:44 AM

There is no way to end poverty in this country.

docflash on December 31, 2015 at 6:42 PM

FIFY

In a just society, welfare and charity is temporary and helpful and done with love to truly the help the recipient and is totally in the private hands of the citizenry.

smokeyblonde on December 31, 2015 at 6:24 PM

Of course, you sort of said that when you mentioned “done with love” since the gov’t is incapable of that.

nonpartisan on December 31, 2015 at 6:28 PM

Funny how it’s only y’all that think talk about poverty must be race-related.

all the slackers without a job but who have the newest fashions and iPhones and all the bling they can lay their hands on.

smokeyblonde on December 31, 2015 at 6:55 PM

due in part because relatively few of those falling below the poverty line actually WORK.

AppraisHer on January 1, 2016 at 3:43 AM

Well, some of them don’t work at all. But a great number of them do – just under the table. If you get all your pay in cash and never deposit a paycheck in your bank, it’s easy to avoid The Man sucking up your taxes and taking away your welfare. And that’s even before illegal activities are counted in. Many of them are not total slackers, they’re just gaming the system to cheat us of our hard-earned pay.

GWB on January 1, 2016 at 11:40 AM

“The mainstream view, as illustrated by meta-surveys of the whole minimum wage research field, is that the job loss effects of raising the minimum wage are very, very small,” Paul Sohn, general counsel for the National Employment Law Project, said in an email to CNBC.com.

Of course the mainstream view, supported by those meta-surveyors, is that the job losses caused are unimportant, because meta-surveyors are high-income folks, whose jobs are safe.

In fact, the more poor people there are, the more job security for the meta-surveyors, who have to get more government grants to do more surveys in order to keep track of the poor folks, and pontificate about stuff on CNBC.

s1im on January 2, 2016 at 9:30 PM