Minimum Wage a Meaningless Feel-Good Measure

I have to admit, I am a policy geek. While some choose to espouse policy points based on pure political ideology, I prefer to look at the facts and come to a rational conclusion.

Take for instance the recent discussion on the minimum wage. After all is said and done, this is nothing more than a feel-good measure that does very little to solve the matter of a livable wage and poverty in America. The best solution is one derived from fact. A solution based on a false premise or incomplete data is doomed to fail. One only needs to look at the failure of the “War on Poverty” and Obamacare to understand that.

It has been 50 years since America declared a War on Poverty, spending $20.7 trillion since then. In 2012 alone we spent $1 trillion on the War on Poverty, yet 50 million Americans remained at or below the poverty line. Think about that for a moment. There are one million millions in a trillion. Multiply that by 20 and the amount is staggering. America, the most generous nation in the world, spent more money than the combined wealth of all other nations that have ever existed on the planet since the beginning of time, and yet we are statistically in the exact same spot we were in 50 years ago on the matter of poverty. Some 50 million people remain in poverty.

One has to wonder if not only the money is being used wisely, but if it is even getting to the right people. If we had done nothing simpler than hand each person identified as living in poverty $1 million, we probably would have done more to eradicate poverty while stimulating our economy at the same time.

The War on Poverty is not a failure because I say so. It is a failure by its own measure as stated by President Lyndon Johnson as he signed the legislation into law surrounded by do-gooder politicians shaking their heads up and down: “We want to offer the forgotten fifth of our people opportunity and not doles. Our American answer to poverty is not to make the poor more secure in their poverty but to reach down and to help them lift themselves out of the ruts of poverty and move with the large majority along the high road of hope and prosperity.”

These are empty words with no basis in reality. Here we are today, with an estimated 1 in 3 Americans receiving some form of means-tested poverty assistance. Supplemental food assistance, Medicaid coverage, direct cash assistance, housing assistance and programs like Head Start. The current policies have failed and it is time for a new direction. However, what do we get coming out of Concord and Washington? The continuation of the same old failed policies and the politically misguided belief that arbitrarily raising the minimum wage will help the poor and the middle class in our country.

Putting aside for a moment the numerous (and often ideologically motivated) positions that either oppose or support increasing the minimum wage, what is missing from the current debate is that even if increasing the minimum wage works as proponents claim, it is a highly ineffective measure at ending poverty. There are 314 million American citizens. It is estimated that around 133 million are employed. According to the Bureau of Labor Statistics there are approximately 3.6 million workers in the United States who earn the minimum wage, roughly 2.5 percent to 3 percent of the work force. Most of these workers are young, work part time or have family incomes significantly above the poverty line.

We know a little more than half of minimum-wage workers are under age 25. Labor statistics also show us that almost 75 percent are working part time or have varying hours. Generally, most economists estimate 20 to 25 percent of minimum-wage earners are at or below the poverty line. After you look at all these facts, we are left with the realization that raising the minimum wage is far more likely to benefit a teenager from a middle-class family than the family breadwinner in poverty working full time. In the end, we might lift 900,000 people just above the poverty line, while potentially forcing another 500,000 workers into the unemployment line (according to Congressional Budget Office), while more than 49 million remain in poverty.

Will our economy or the poor in our country be helped by taxing prosperity instead of allowing it to be used to increase capital investment, which will help to add value to our labor market? Do we really believe importing millions of low-skilled and poorly educated laborers from beyond our borders will help our economy and raise our current citizens out of poverty? Without the input or insight of how raising the minimum wage will affect our fragile labor market or a struggling small business, Democrats have offered yet another opportunity at failure.

The harsh reality is that stagnant wages affecting far too many Americans is a real issue, and one we as a country need to address through ethical, disciplined, free-market solutions. It is time we understand the real solution to the issue of poverty is one of economics rather than politics.

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