Minimum-wage hike is the path to poverty for poor people

Apparently, Hillary Clinton is a little confused about the economy.

Last week while speaking at a campaign rally in Massachusetts, she suggested raising the minimum wage wouldn’t kill jobs, going on to say, “Don’t let anybody tell you that it’s corporations and businesses that create jobs.”

Now, if a person fails to see that businesses are the job creators in the economy, it’s understandable that such person would also fail to see how raising the cost of doing business would kill jobs.

But just as Clinton’s claim that businesses don’t create jobs is ludicrous, so too is her belief that raising the minimum wage wouldn’t be a devastating blow to jobs. Unfortunately, it’s an all-too-common misunderstanding.

Last month, State Sen. Tick Segerblom announced plans to push a bill next year that would increase the minimum wage to $15-per-hour in Nevada.

While it may sound appealing to double the pay of fast-food workers and other entry-level workers with one wave of the government’s mandate wand, there’s a big difference between good intentions and good results.

What often gets lost in the emotional appeals of union-paid protesters supposedly representing minimum-wage workers is that the root cause of poverty isn’t someone’s wage, but whether or not that person works.

National statistics show that having a job is the best way to escape poverty. Of people ages 16 and older living beneath the poverty line, 67 percent do not work, while only 9 percent worked full-time and year round. Conversely, over 81 percent of households within the top income bracket had at least two members working.

Given that not having a job and poverty are so closely correlated, raising the minimum wage — which even the nonpartisan Congressional Budget Office acknowledges would lead to substantial job losses — would have the exact opposite effect of what’s intended. Instead of providing a higher wage to live on, the government would take away hundreds of thousands of individuals’ ability to make a living. Young adults and those new to the workforce would be particularly harmed by such a move.

And what about single mothers working at minimum wage jobs that the media so often tries to portray as the rule, rather than the exception? A lost job would hit them hardest of all.

If it’s hard for a mom to feed her child while working at a minimum wage job, it’ll be even harder when she’s unemployed. Fortunately such circumstances are rare. Only 4 percent of those making a minimum wage are single parents who work full-time. Instead, over half of those working for minimum wage are 24-years-old or younger, and the majority of them — young and old workers alike — live in households that earn over 150 percent of the poverty line; many are still in school.

What’s most encouraging is that those who take minimum-wage jobs typically earn raises quickly. Two-thirds of minimum workers receive a raise within a year of starting employment.

To enjoy the higher salary that comes with job experience and improving your marketable skills, a worker has to be able to get a first job. But when the minimum wage is too high for inexperienced workers, the alternatives are heart breaking.

Consider Las Vegas teen James “Bubba” Dukes. As a teen father struggling to graduate, he looked all over for a job — including at several fast-food establishments — but couldn’t get so much as an interview. Because of the minimum wage — a government-imposed wage floor that harms unskilled and inexperienced laborers — Dukes couldn’t find work. Unable to find a job legally, he eventually turned to selling drugs.

That tragic story, which currently happens far too often, would repeat itself even more frequently if Nevada government raised the minimum wage to $15 an hour as Segerblom proposes, or even to $10.10 per hour as suggested by President Obama.

Making the situation worse for new workers is that technology has made it possible to employers to simple eliminate entire job categories previously filled by entry-level workers if government mandates make those workers too expensive to justify hiring. Many minimum wage jobs, like those in fast-food establishments, are easily automated, so a substantial hike in the minimum wage will result in a Ronald McDonald robot taking your order instead of a smiling crew member.

Raising the minimum wage takes away the opportunity for inexperienced workers to learn skills and obtain the experience necessary to advance into other, better roles. While raising the minimum wage may sound noble, it cuts the bottom rung of the economic ladder for those, like Dukes, who most need — and want — to climb it.

A version of this article ran in Nevada Business.

Chantal Lovell is the deputy communications director at the Nevada Policy Research Institute, a non-profit, free-market think tank. For more, visit http://npri.org.