Minimum wage hikes a poor step towards prosperity
California’s minimum wage continues its steady incline, despite economic evidence against the idea.
The statewide minimum wage will hike to $15 by 2022 — a policy many Golden State politicos claimed would boost economically disadvantaged communities when they voted to approve the measure last year. But a new study by the Employment Policies Institute proves anti-poverty measures like a higher minimum wage actually do the opposite.
University of California, Irvine economists David Neumark and Brittany Bass and Brian Asquith of the National Bureau of Economic research studied the long-term effects of anti-poverty initiatives in struggling neighborhoods, looking at how minimum wage and welfare policies have impacted poverty rates over the past three decades. They found that rather than improving impoverished communities — as they are designed to do — they hurt poor areas.
“Neither a higher minimum wage nor more-generous welfare benefits have reduced poverty rates in the country’s most-disadvantaged neighborhoods. In fact, the authors find some evidence that poverty rates and the share of residents on public assistance have increased alongside a rising minimum wage,” the study reads.
California lawmakers should keep that in mind as efforts will likely mount to push the state wage even higher as we near $15. Better would be to allow local communities to make their own assessments of what an appropriate minimum wage might be, based on local factors and other considerations.
But, the reality is that artificial, government mandated minimum wage levels are a poor substitute for policies which facilitate the organic, market-based creation of jobs and wealth. Already, wage hikes have forced companies to cut jobs, reduce hours, and in some cases, replace human labor altogether with automated machines. Fewer jobs and higher costs hurt everyone — especially poor communities.
If our elected officials truly want to reduce poverty, they should focus on growing the economy to create a stronger demand for workers, which in turn will drive up wages for everyone. But since California’s politicos remain ideologically committed to a higher minimum wage, they’ll have to lie in the ironic bed they’ve made. After all, the people this policy hurts the most are the ones it’s supposed to help.
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