Acton’s Director of Research, Samuel Gregg, recently wrote about the effects of raising the minimum wage at the National Review Online. The latest CBO report estimates that increasing the minimum wage to over $10/hour in 2016 will not greatly affect the poorest in society; it is estimated that this increase will only help 2% of those living in poverty. The benefit of the increase will go to people “already comfortably above the poverty line.” Gregg discusses this phenomenon:
Is that just?
Given the minimal (pardon the pun) effects of mandated minimum wages upon poverty, one must ask why some people invest so much intellectual energy and political capital in a policy that tends to benefit, for example, teenagers and young people from comfortable backgrounds who won’t be staying in minimum-wage jobs for very long.
In part it’s the top-down approach at work. Legislating minimum wages gives us the illusion that legislators and governments can flip a switch and make things better. Legislated minimum wages, however, aren’t immune from the workings of supply and demand. (more…)