February 19, 2014
By James Sherk
The Times’ calculator asks users to try to balance living expenses on a minimum-wage budget. No doubt about it – it’s hard. Not much remains after food, rent, utilities, and transportation expenses. Trying to support a family on a minimum-wage job would be incredibly difficult. But few on the minimum wage actually do this.
The New York Times did not mention that the average family income of a minimum-wage worker exceeds $50,000 a year. How? The vast majority of minimum-wage workers are second (or third or fourth) earners in their family. Minimum-wage jobs are entry-level positions, primarily filled by unskilled and inexperienced workers. Many minimum-wage workers are between the ages of 16 and 24, and two-thirds work part-time.
So while lots of Americans start out working near the minimum wage, few raise a family on it. Instead, as they gain experience, they become more productive and command higher pay. Two-thirds of minimum-wage workers get a raise within a year. The typical pay increase: 24 percent.
Of course, some workers do remain stuck at the minimum wage. But a host of federal programs ensure they do not fall through the cracks, and that their incomes are higher than the NYT’s calculator shows. (And, as the CBO has noted, these benefits phase out steeply as income rises. Accounting for this makes it unclear how many low-income workers’ finances would improve with a higher minimum wage).
Additionally, raising the minimum wage makes employers more reluctant to hire, which certainly seems unlikely to improve these workers’ situations. Even the Congressional Budget Office estimates President Obama’s proposed hike would cost half a million jobs. Aside from that, of course, raising the minimum wage makes perfect sense.
- James Sherk is senior policy analyst in labor economics at the Heritage Foundation
Originally appeared in the National Review Online
Research Fellow, Labor Economics
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