In under a decade, the concept of a $15 minimum wage went from being treated as something completely insane, to something that made its way into the Democrat Party’s platform, and now something that Joe Biden wants to implement federally.
“There should be a national minimum wage of $15 an hour,” Biden said during a speech last Thursday night. “Nobody working 40 hours a week should be living below the poverty line.”
That nobody who works full time should live in poverty is a common argument for hiking the minimum wage, and one that overlooks the obvious fact that there are people who will see their jobs lost under a $15 minimum wage (thus making them more susceptible to poverty). There are also people who currently work full time who would see their hours reduced (potentially to the extent that they end up making less overall) under a $15 minimum wage.
Whether or not a $15 minimum wage would lift people out of poverty (on net balance) depends on the ratio of people whose incomes will be pushed above the poverty line to those who will lose their jobs permanently.
The liberal media is already burying the lede on that. “Biden minimum wage proposal could lift more than 1 million workers out of poverty” read one headline over at CBS News. They were citing a report from the Congressional Budget Office (CBO) for that claim – a report that found 1.3 million would be lifted out of poverty thanks to a $15 minimum wage. But also that it would cost roughly 1.3 million jobs (but as many as 3.7 million) jobs could be lost. In other words, for every person taken out of poverty, at least one person would have their income reduced to zero. In the worst case scenario, nearly three times as many people will be put out of work than lifted out of poverty.
Poverty is a job problem, not a wage problem. As I wrote years ago: In 2015, only 11 percent of (working age) people in poverty worked full time. By contrast, 63 percent of those in poverty don’t work at all. Of full time workers in America, only 2 percent live in poverty (compared to 32 percent of the unemployed). If we look at those with families, the numbers become even more stark. For instance, in 2011 only 0.3 percent of families in poverty worked an hourly job earning the minimum wage.
A poll of professional economists in 2019 found 74% opposing a $15 minimum wage. That should deter any politician from supporting such a policy – but it doesn’t because the opposition to such a policy among economists is a mirror image of the opinion of non-economists, who overwhelmingly support it.
It also has to be emphasized that the aforementioned CBO report was from 2019, before the pandemic, which has disproportionately killed low skilled jobs. Millions of small businesses are already under massive financial stress, and the negative consequences of wage hikes would only compound in today’s environment.