This paper also argues that the discussion of minimum wages focuses too heavily on employment. ![]() These add up to between $800 and $3,500 a year.Īddressing these policies would do far more good for poor households than would a minimum wage increase, and with fewer tradeoffs. For example, poor households often pay higher prices for goods than do middle- and upper-income households, and regulations and other policy interventions are a major reason why. Policy makers should instead pursue better targeted policies that have proven effective. Additionally, a majority of minimum wage earners live in households well above the poverty line, making the measure poorly targeted to its intended beneficiaries. The bill’s authors implicitly acknowledge this by phasing in its increases over five years, rather than all at once. This paper’s section-by-section analysis of the bill finds that it would perform poorly as a poverty reduction measure, in large part because of the tradeoffs it would entail. These objections apply to the Raise the Wage Act, recently passed by the House of Representatives, as well as to any similar state, local, or federal legislation. Three, minimum wages take choices away from employees who might prefer non-wage pay such as tips, insurance, employee discounts, or other benefits.Įven if the economic tradeoffs are roughly neutral, the second and third considerations tip the balance against an increased minimum wage on ethical grounds. Two, minimum wage increases provide fertile ground for corporate rent-seeking by large companies seeking to harm smaller competitors. Minimum wage increases are not a net good, and zero-sum at best. ![]() One, the negative economic tradeoffs for people with low income are roughly equal to any benefits. This paper opposes increases for three reasons, and applies that analysis to a current bill, the Raise the Wage Act, which would increase the federal minimum wage to $15 per hour by 2024 and index it to average worker pay. Raising the minimum wage is currently a top policy issue at the federal, state, and local levels. View Full Document as PDF Executive Summary
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