Minimum wage increase not for teenagers and flunkies?

DNC-logo-on_white-sq-250“Myth:  Raising the minimum wage is for flunkies and teenagers.”

—The Democratic National Committee, ~Jan. 2014 on its “Your Republican Uncle” website

 

Overview

The DNC’s “Your Republican Uncle” website produces yet another garbled and misleading myth claim.

The Facts

The Democratic National Committee sponsors a website called “Your Republican Uncle.”  The DNC intends the site to offer rebuttals to common Republican talking points.  The second item on its list of gender issues says it’s a myth that raising the minimum wage is for “flunkies and teenagers.”

The site offers the following explanation:

Women are more likely than men to find themselves working a minimum wage job . That’s part of why President Obama favors an increase in the minimum wage — because supporting women and families strengthens the middle class.

 

As with the previous item on the DNC’s list of gender issues, this item has a supporting link to the left-leaning Center for American Progress.  The linked article, “Women Are the Biggest Losers from Failure to Raise Minimum Wage,” focuses primarily on the number of women earning the minimum wage, not on the number of low-skilled or teenaged workers earning the minimum.  One paragraph touches on the issue directly:

(W)omen earning the minimum wage are also overwhelmingly adults—not teenagers. More than 76 percent of women earning the minimum wage are 20 years old or older. In fact, 40 percent of female minimum-wage earners are over the age of 30.

 

About 60 percent of women earning the minimum wage are aged 30 or under by the reckoning of the Center for American Progress.

Analyzing the Rhetoric

Flunkies do unskilled, menial work.  Teenagers in the work force tend to do unskilled, menial work.

We think the DNC has a problem with its line of evidence.  Even if 100 percent of women making minimum wage are over age 30, how do we know they’re doing something more than unskilled work?  The data from the Center for American Progress do not address the key issue.

Worse for the DNC, the data from CAP suggest that most women making the minimum wage are young—30 or younger—and likely on that basis to lack the skills justifying a higher rate of pay.  Some of the younger workers doubtless have more advanced job skills, but neither is there any rule that older workers necessarily have more advanced skills.  Of the 40 percent of women over age 30 the CAP says earn minimum wage, what percent do unskilled labor?

EPI min wage infographic

Economic Policy Institute infographic

Are we even looking at the right question?

As we started looking at research on minimum wage demographics, we ran into research that prompted us to reassess what the DNC was trying to say.  The material from the CAP emphasized that raising the minimum wage would also benefit workers making more than the minimum, calling it a “spillover effect.”  A left-leaning think-tank, the Economic Policy Institute, has published a study focusing on demographics that would benefit from a minimum wage hike.

The spillover effect results in raises for workers making more than the minimum wage yet less than the new proposed minimum.  EPI also anticipates a ripple effect of wage adjustments boosting wages for employees making more than minimum wage.  Adding these groups to the set of those receiving a direct benefit from a minimum wage boost changes the demographics some.  Probably fewer teenagers and more mature workers receive a benefit.  However, EPI does not address the DNC’s suggestion that low-wage workers aren’t low-skilled workers.

We’re happy to extend charitable interpretation to the DNC.  It’s a legitimate point that raising the minimum wage results in benefits for some who are not now making the federal minimum wage.  At the same time, we have to point out that the DNC did not make any clear effort to emphasize that point.

education level of minimum wage earners 2012The Bureau of Labor Statistics

The United States Bureau of Labor Statistics provides some data on the education of minimum wage earners.  About 57 percent of those making the federal minimum wage or below have a high school education or less.

It’s important to note the limitations of these estimates.  A person with little education may have specialized work skills.  On the other hand, a person with a college degree may hold a job making the minimum wage, doing unskilled labor despite having specialized work skills.  And, as EPI points out, people making more than the federal minimum wage will gain from a higher minimum wage.

Still, the BLS numbers tentatively support the proposition that most of those making the federal minimum wage work at unskilled jobs.

Winners and losers?

Proponents of raising the minimum wage, including EPI, like to present the policy positively, acknowledging little or no downside.  It is said the minimum wage hike will help the poor, narrow the gap between rich and poor, stimulate the economy and even create jobs.

Is there a downside?

Critics contend raising the minimum wage will increase unemployment.  Kevin A. Hassett and Michael R. Strain of the American Enterprise Institute made the point in a 2013 op-ed published in the Los Angeles Times:

The case against raising the minimum wage is straightforward: A higher wage makes it more expensive for firms to hire workers. How big an effect does this have on the job market? Economists debate this. But no one argues that increasing the minimum wage increases the number of unemployed workers who find jobs. In the end, the trade-off is clear. People who keep their jobs get more money; those who lose their jobs, or fail to get new ones, suffer.

 

The nonpartisan Congressional Budget Office accepts that raising the minimum wage hurts employment:

Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.

 

When the CBO says the share of employed low-wage workers would probably fall slightly, this is what it means:

CBO minimum wage job loss estimates 2014

Congressional Budget Office chart, 2014

Thousands of workers, perhaps even hundreds of thousands, would lose their jobs.  There’s a downside to raising the minimum wage.

Summary

“Myth:  Raising the minimum wage is for flunkies and teenagers.”

True Statement icon Medium charity icon Fallacy of ambiguity icon Black or White Fallacy icon

Interpreting the DNC charitably presents a challenge.  If we assume the DNC tries to say raising the minimum wage isn’t entirely for flunkies and teenagers we run into a problem of ambiguity.  What if flunkies and teenagers gain 99 percent of the benefit from a minimum wage increase?  Wouldn’t the Republican uncle have a point?  Our data suggest the number is pretty high, probably more than half. Interpreting the DNC’s point charitably places its literal claim in a poor light, indicative in this case of a black-or-white fallacy.  The Republican uncle has a point in saying the minimum wage is an entry-level rate of pay fit for teenagers and unskilled workers, and the DNC failed to answer that point.  The DNC’s argument suffers from ambiguity and coherence problems.

 

References

The Democrat’s Guide to Talking Politics with Your Republican Uncle.” Your Republican Uncle. Democratic National Committee, Jan. 2014. Web. 04 June 2014.

Madland, David, and Nick Bunker. “Women Are the Biggest Losers from Failure to Raise Minimum Wage.” Center for American Progress Action Fund. Center for American Progress Action Fund, 20 June 2012. Web. 05 June 2014.

Filion, Kai. “Fact Sheet for 2009 Minimum Wage Increase—Minimum Wage Issue Guide.” Economic Policy Institute. Economic Policy Institute, 20 July 2009. Web. 06 June 2014.

Cooper, David, and Dan Essrow. “Low-wage Workers Are Older Than You Think: 88 Percent of Workers Who Would Benefit From a Higher Minimum Wage Are Older Than 20, One Third Are Over 40.” Economic Policy Institute. Economic Policy Institute, 28 Aug. 2013. Web. 06 June 2014.

Characteristics of Minimum Wage Workers: 2012.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, 26 Feb. 2013. Web. 07 June 2014.

Tables 1 – 10.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, 26 Feb. 2013. Web. 08 June 2014.

White, Mercedes. “Will the Real Minimum-wage Worker Please Stand Up?DeseretNews.com. Church of Jesus Christ of Latter-day Saints, 4 Mar. 2013. Web. 08 June 2014.

DeSilver, Drew. “5 Facts about the Minimum Wage.” Pew Research Center. Pew Research Center, 4 Dec. 2013. Web. 08 June 2014.

Calabria, Mark A. “Who Works at the Minimum Wage?Cato Institute. Cato Institute, 31 July 2013. Web. 08 June 2014.

Sherk, James. “Who Earns the Minimum Wage? Suburban Teenagers, Not Single Parents.” The Heritage Foundation. The Heritage Foundation, 28 Feb. 2013. Web. 07 June 2014.

Kaste, Martin. “Raising The Minimum Wage: Whom Does It Help?NPR. NPR, 03 Jan. 2012. Web. 08 June 2014.

Weissmann, Jordan. “What Would Happen If We Got Rid of the Minimum Wage?Slate Magazine. The Slate Group, 14 May 2014. Web. 06 June 2014.

Hall, Doug, and David Cooper. “How Raising the Federal Minimum Wage Would Help Working Families and Give the Economy a Boost.” Economic Policy Institute. Economic Policy Institute, 14 Aug. 2012. Web. 08 June 2014.

Hassett, Kevin A., and Michael R. Strain. “Why We Shouldn’t Raise the Minimum Wage.” Aei.org. American Enterprise Institute for Public Policy Research, 10 Mar. 2013. Web. 08 June 2014.

The Effects of a Minimum-Wage Increase on Employment and Family Income.” CBO.gov. Congressional Budget Office, 18 Feb. 2014. Web. 08 June 2014.

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