Should We Raise the Minimum Wage?
Claims made over the benefits of raising the minimum wage have received a great deal of national policy traction in recent years. The belief that such increases would spur economic growth and encourage spending while reducing welfare dependence among the poorest families has been shared by most Democrats and more than a few Republicans.
This sounds good, but is it good policy? According to research undertaken by economics professor Joseph J. Sabia, decisions to raise the minimum wage have failed to deliver on nearly all of their promises.
“Policies such as a more generous Earned Income Tax Credit (EITC) do a much better job of raising incomes of the working poor.”
“Minimum wage hikes do not generally provide income to poor families, because most minimum wage earners are not poor,” Sabia says. “Worse yet, minimum wage hikes increase unemployment among low-skilled individuals because employers often react to increases by cutting jobs and hours.”
Using three decades of nationally representative Census data on employment, earnings and public program participation, Sabia said minimum wage hikes may even increase dependence on welfare.
“Policies such as a more generous Earned Income Tax Credit (EITC) do a much better job of raising incomes of the working poor because, unlike the minimum wage, the EITC is targeted to workers in poor households rather than workers earning a low wage,” Sabia says. “The EITC incentivizes people to enter the workforce, and this is its key advantage because the best way to escape poverty is a job.”
Sabia has been a guest in many statehouses as well as on Capitol Hill in Washington, D.C., where he has testified before the Senate on the implications of his research for minimum wage policy.
Sabia’s research also is helping to shape long-term policy in another critical area of the public sector: the U.S. military. As the Department of Defense enacts the largest drawdown of armed forces in its history, Sabia’s prodigious research on the effects of war deployments on the health and well-being of service members and their families will be important in designing interventions to help military families.
“The U.S. military is committed to helping service members in their transitions to civilian life,” Sabia says. “I’m proud to be able to contribute.”