Minimum-Wage Hike Has Losers, Many of Them Poor

The Wall Street Journal

David Neumark makes a strong case that raising and expanding the Earned Income Tax Credit is a better way to lift families out of poverty than increasing the minimum wage ("Who Really Gets the Minimum Wage," op-ed, July 7). The latter is an inefficient mechanism for poverty reduction because a relatively small percentage of the benefits of higher wages actually go to poor families who are dependent on minimum-wage earners.

Can we at least get some unbiased, real and clear data regarding rising inequality before we are asked to throw more billions of dollars into antipoverty measures? Let's start by incorporating the value of all federal benefits, subsidies and tax credits into income-inequality calculations so that we can get an honest picture of our rich-poor gap. Otherwise, if the EITC and food stamps aren't included in income analytics, increases in money directed to the poor under those two programs will have negligible impact on the poverty rate or income gap.

According to a 2012 Congressional Budget Office study, the bottom 20% of U.S. households by income get on average about three times their annual earned income in federal transfer payments and benefits already. Let's stop ignoring those gap-reducing, lifestyle-improving numbers in national income analyses, and then we can have an honest debate about the extent of the income-distribution problem and the best way forward.

Mark Thomas

Falls Church, Va.

If he'd had more space, Mr. Neumark might have included the findings of his previous research that highlighted the disemployment effect increasing the minimum wage has on teenagers and minorities (both African-American and Hispanic). Mr. Neumark found that for every 10% increase in the minimum wage, African-American or Hispanic males ages 16-24 and 20-24 experienced decreased employment of 6.3% and 5.5% respectively. The impact for African-American teenagers alone is a decrease in their employment of 8.4%. Thus it is even more surreal that President Obama would be pushing for a minimum-wage increase which would hurt most the segment of our population that he claims to champion with his "My Brother's Keeper" program. One can only conclude that a minimum-wage increase sound bite played better in the polls irrespective of the reality of its negative consequences.

Ron Dudley

Sanibel, Fla,

Mr. Neumark address upward mobility and advancement in relation to minimum wage; few writers and opinion makers do. My company operates over 85 Burger King and Peter Piper Pizza franchised restaurants in Texas and New Mexico, and we have dozens of employees who started working with us as part-time or hourly or minimum-wage employees, or all three. About half of our general managers in the pizza brand were in this wage group at one time. Through diligence, hard work and learned skills they earned promotions to manager and above. This group now enjoys average annual salaries of over $53,000, plus a wide range of benefits including paid vacations, health insurance (with most of the premium cost paid by the employer), a best-in-class 401(k) program, a cash bonus program, and all of this with a five-day workweek.

In our experience, those employees who are deserving of higher pay receive regular raises that make a minimum-wage hike unnecessary at the state or federal level. The free market is best at determining appropriate wages. Our industry is frequently derided as providing "dead end" jobs to its entry level workers, but we are proud of the environment and culture we have created to provide real opportunity for young people looking to get ahead.

J. Kirk Robison

El Paso, Texas

If raising the minimum wage didn't reduce poverty, then it wouldn't be shown to shrink public-assistance programs. Yet economists Rachel West and Michael Reich have illustrated how a raise to $10.10 would save taxpayers $4.6 billion in food-stamp outlays. This is in sharp contrast to Mr. Neumark's proposal to only increase the EITC, which, though an admirable program, would result in more corporate welfare—taxpayers subsidizing the poverty wages of profitable mega-corporations. In the words of conservative Ron Unz: "Doesn't it make more sense for employers to pay their workers than the government?"

Pete Davis

Time for a Raise Campaign

Center for Study

of Responsive Law

Washington

If we consider minimum wage as political policy, it is a winner. Instead of fighting the Democrats on this issue, Republicans should embrace it. Indeed, why not up the ante? The president has declared support for a $10.10 minimum. So Republicans should pitch for $11 or $12. Sure it's bad economics, but the whole concept is bad economics and we've survived it for decades. Short of catastrophic error, economies adjust. Might as well join the party and collect the votes.

Robin Carpenter

Hanover, N.H.



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