Minimum wage is not an anti-poverty tool

A proposal by Senators Edward Kennedy and Rick Santorum to increase the U.S. minimum wage from its current $5.15 an hour is a bad idea. Moreover, the idea that minimum wage legislation is an anti-poverty tool is sheer nonsense, says economist Walter E. Williams.

There is little evidence suggesting increases in the minimum wage help the poor. Data from the Bureau of Labour Statistics reveal:

While minimum-wage workers earn $5,00 below the poverty line for a family of three, only 2.2 percent of working adults earn the minimum wage.

Minimum wages discriminate against the employment of low-skilled workers because employers are not willing to pay $7.25 an hour for a worker whose skills enable him to produce only $4 worth of value per hour.

The low-skilled worker category is dominated by teenagers who lack the maturity, skills and experience of adults.

Since the majority of minimum wage workers are young people, education and training would seem to be the key to reducing poverty, not fiddling with the minimum wage. Williams says black teenagers are additionally burdened by a grossly fraudulent education, making them less desirable workers, even in low-skilled jobs.

With successive minimum wage hikes, black teenage unemployment rose, relative to white teenagers, to where it's become permanently double that of whites. The only explanation of these effects is the minimum wage law.

Source: Walter E. Williams, Minimum Wage Is Not An Anti-Poverty Tool, Investor's Business Daily, March 24, 2005.

For Williams column: http://www.townhall.com/columnists/walterwilliams/ww20050323.shtml

For more on Economic Issues: Minimum Wage: http://www.ncpa.org/iss/eco/

FMF Policy Bulletin/ 04 April 2005