Sunday, January 5, 2014

$10 minimum wage would raise 4.6 million from poverty without 'welfare'

This is what I, a liberal and an empiricist, am here for: to point out when experience and facts have settled an issue, and we don't need to have Left-Right arguments about it anymore.  The positive effect of raising the minimum wage to $10 is another "case closed" -- it's no longer a matter of opinion or economic theory -- as Mike Konczal at Wonkblog points out:

[R]aising the minimum wage to $10.10 an hour, as many Democrats are proposing in 2014, would reduce the number of people living in poverty by 4.6 million. It would also boost the incomes of those at the 10th percentile by $1,700. That’s a significant increase in the quality of life for our worst off that doesn’t require the government to tax and spend a single additional dollar.

This is not based on one study, but 12 major studies since the 1990s. Indeed, over the years, as some states raised the minimum wage and others did not, economists have been able to observe the contrasting effects of these controlled "experiments" with the minimum wage. Konczal sums up the evidence:

As many economists have argued, the minimum wage ”substantially ‘held up’ the lower tail of the U.S. earnings distribution” through the late 1970s, but this effect stopped as the real value of the minimum wage fell in subsequent decades. This gives us an empirical handle on how the minimum wage would help deal with both insufficient low-end wages and inequality, and the results are striking.

By Mike Konczal
January 4, 2014 | Washington Post

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