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Who in Florida Needs a Raise? Minimum Wage Myths

TALAHASSEE, FL – Fast-food workers around the country have been agitating for raises, and some members of Congress are pressing to increase the national minimum wage. But what would the actual economic impact be of a boost for the lowest-paid workers? Critics have charged that raising the minimum wage would mostly help teenagers, but economists say that's largely a myth.

David Cooper

David Cooper, an economic policy analyst at the Economic Policy Institute, looked at who would get a bump in pay if the hourly minimum went up to just over $10, as one bill in Congress proposes. He found it would be mostly the working poor, including a large portion of single mothers, who would benefit.

"The reality is that the average age of these workers is 35 years old," he said. "The majority of them are women, a little over a quarter have children, and 55 percent work full-time; this is their full-time job."

Another common concern is that raising the minimum wage would increase unemployment. According to Cooper, that was the conventional wisdom, until a series of studies in the 1990s compared states that raised their minimum wages with others that had not. Cooper said the first looked at border counties between New Jersey and Pennsylvania.

See more about Florida and other states here.

"What they found was that in New Jersey, where the minimum wage was raised, employment actually went up relative to Pennsylvania, the direct opposite of what the textbook model would suggest."

He said other studies have also confirmed that raising low-end wages doesn't increase unemployment.

Cooper said the economists found that a higher minimum wage improved productivity, reduced turnover and absenteeism, and boosted morale among low-wage employees. In addition, he said, the new wages have a ripple effect on the local economy, because most minimum-wage workers have to spend every dime they make.

"Maybe they needed to buy a new car," he cited as an example. "Now that they're making a little more money, they can afford to make a payment plan, so they go and they buy that new car. That not only benefits the car manufacturer, but it also benefits the local dealership."

About 1.8 million Floridians would be affected if the federal minimum wage went up to $10.10 an hour, as that bill now before Congress proposes, and 92 percent of them are over age 20. 

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Comments  (to add a comment go here)

On September 16, 2013, Keith Blackie of Lake City wrote:

The article concerning raising minimum wage contradicts the data supplied in that most of the people that this will supposedly help, some 65%, are not even remotely "working poor". Some 9% of the people this would "help" are already making over $100,000 per year.

Correlating this data with the BLS data would also seem to refute the claim that a large portion are single mothers. If we assume all single working mothers are "working poor", (the BLS data does not support that claim), then a mere 18% of that 1.8 million workers are included.

It is noteworthy to mention that the 1990s study in New Jersey was discredited due to poor quality data, and that multiple subsequent studies have shown the results of the New Jersey study got it wrong. According to multiple studies by economists David Neumark and William Wascher, the employability of minimum wage workers decrease as minimum wage increases.

To be fair, I don't think raising the minimum wage will mean economic Armageddon, but neither will it improve the lot of those it is designed to improve, because most of those who are affected utilize minimum wage sector businesses at a larger percentage than those who can afford to shop at more expensive businesses. Businesses whose workforce includes many minimum wage employees will certainly pass their increased expenses on to consumers. Not only does this affect minimum wage earners, but it affects every consumer.


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