Here we go again…beginning January 1, 2012, eight states raised their minimum wage. The way news articles have hyped this, one would think that somehow raising the wage another 30 cents is going to catapult the bottom 99 percent into the top 1 percent. According to the
Huffington Post “the new rates will translate into hundreds of additional dollars annually for many people who are working yet remain in poverty.” In another article, the
New York Times refers to a 1994 “landmark” study on minimum wages by David Card and Alan Krueger showing the increasing the minimum wage did not reduce employment in the fast food industry. By the way, this study was highly controversial and discredited by many economists due to its methodology. Since then, some studies, such as one by
Neumark and Wascher and one by
Burkhauser, Couch and Wittenberg, have found an adverse effect of the minimum wage on lower-skilled workers, young adults and teenagers, particularly African-Americans.
Proponents of a minimum wage or a “living wage,” (as is being proposed in New York City and is defined as at least $10 an hour plus benefits) argue that a wage floor is necessary to lift people out of poverty, especially those earners who support families. But let’s look at the characteristics of a minimum wage worker.