One of the questions overshadowed during last night’s #FanGate debate debacle between Governor Rick Scott and former Governor Charlie Crist was about raising the minimum wage. Crist said he supported raising it to $10.10 an hour. Scott does not support raising the wage floor arguing it would cripple businesses and drive up costs.
Today the Economic Policy Institute released a new study with results supporting Crist’s claims that it’s time for wages to go up.
According to the study it’s been more than five years since the federal minimum wage was raised to its current $7.25 per hour floor.
“Over that time, the value of a minimum-wage income has fallen nearly 10% due to rising prices,” the study’s executive summary reads.
Critics of the fight to raise the minimum wage worry such a move would be detrimental to small businesses. They claim it would result in massive layoffs and rising consumer prices. But the Economic Policy Institute points to something critics probably don’t want you to know – raising the wage floor is good for the economy because it takes people out of costly social safety net programs.
According to results, about half of all workers in the bottom 20 percent of wage earners receive some form of public assistance whether it’s Medicaid, the Earned Income Tax Credit, food stamps or any other in a long list of programs available to low income people. Those programs account for more than $45 billion in government spending and about half of it goes to workers who earn less than $10.10.
The report concludes that if the minimum wage were raised to $10.10, more than 1.7 million American workers would no longer rely on public assistance programs reducing government spending on social safety nets by $7.6 billion a year. In addition, safety net programs would save 24 cents for every additional dollar in wages paid to workers affected by a minimum-wage increase to $10.10.
That’s a crap ton of savings. So, why all the hubbabaloo against it? That’s thanks to people like economist David Neumark. He wrote an op-ed in the Wall Street Journal earlier this year explaining why raising the minimum wage is a bad thing. His claims aren’t really about job loss so much as about why it’s not necessary to strain businesses for a wage hike that won’t even benefit the people who need it.
“Many low-wage workers are in higher-income families—workers who are not the primary breadwinners and often contribute a small share of their family’s income. Second, some workers in poor families earn higher wages but don’t work enough hours. And third, about half of poor families have no workers, in which case a higher minimum wage does no good,” Neumark writes.
Neumark instead suggests alternatives.
“The Earned Income Tax Credit directly targets low-income families, rather than low-wage workers. And my research with William Wascher, using Census Bureau data, shows that a higher EITC boosts incomes of poor families, and even—by encouraging work—leads to more low-income families earning their way out of poverty. The EITC could be made more generous, particularly for childless adults who currently get little from it,” the WSJ op-ed reads.
So, the bottom line, no matter what side of the issue you’re on, you can find either an expert or a study to support your views. It’s worth noting though, even Neumark acknowledges that supporting minimum wage increases is the more popular opinion among voters.
An article in Forbes speculates that may be why Democrats are latching on to the issue during the 2014 mid-term elections.