The Daily Item, Sunbury, PA


April 5, 2013

5 myths about minimum wage


So what's the discrepancy between theory and what so many economists think? When economists have analyzed the data, many have found few, if any, negative effects of a minimum wage on employment. This has shifted some of the thinking in the profession — and pointed to flaws in a perfectly competitive model.

Paying workers more often leads them to feel better about their work and reduces stress, both of which increase productivity. And when workers produce more, employers' labor costs fall. Companies such as Costco have figured this out, and voluntarily pay higher wages. Other firms may not care whether they pay less and get less from their workers, or pay more and get more.

But workers aren't indifferent to this choice. A family trying to survive on the minimum wage can find itself living deep in poverty. Raising the minimum wage would not only lift some families out of poverty, but their additional earnings would contribute to the overall economy by raising demand and job growth as they spend more in their communities.

4. The minimum wage is a partisan issue.

The vast majority of the public supports raising the minimum wage from $7.25 to $9 per hour, according to a Gallup Poll. Not surprisingly, more Democrats than Republicans favored Obama's proposal, but 71 percent favored the increase, including a majority of respondents in each party.

Perhaps most interesting is a study that randomly exposed participants to information about inequality in the United States. A majority of liberals and almost half of conservatives already supported a higher minimum wage, and those shown information about U.S. income distribution became even more supportive of raising the minimum wage.

5. Raising the minimum wage wouldn't help the working poor.

Think only teenagers earn the minimum wage? Analysis of minimum-wage workers shows that, at most, 20 percent are teenagers, about 50 percent are full-time employees and about 60 percent are women. The vast majority have household earnings below the median, which was $50,054 in 2011.

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