Almost everything Americans have been told about the minimum-wage debate is false or erroneous, according to a column in Forbes by University of Georgia economist
Jeffrey Dorfman.
For starters, the debate about the federal minimum wage may provide good red meat to energize supporters of both political parties, but it appears unlikely to move the needle for the U.S. economy even if it is raised.
Dorfman noted the Bureau of Labor Statistics (BLS) shows there are only 3.6 million workers at or below the current minimum wage — only 2.5 percent of all U.S. workers. Within that small group, 31 percent are teenagers and 55 percent are 25 or younger, which leaves a paltry 0.8 percent of all Americans over 25 earning the minimum wage.
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In addition, a recent study shows most minimum-wage workers are the second or third earners in their family, and 43 percent live in households earning more than $50,000 annually.
"Thus, minimum-wage earners are not a uniformly poor and struggling group; many are teenagers from middle-class families and many more are sharing the burden of providing for their families, not carrying the load all by themselves," Dorfman wrote.
He explained that the group of American workers earning the minimum wage of $7.25 per hour is also dwindling. In 1980, 15 percent of hourly workers earned the federal minimum, but, according to the BLS, that figure is now down to only 4.7 percent.
Dorfman said he wanted to skewer an important myth based on the relationship between the minimum wage and labor productivity.
"This one is particularly obnoxious because those selling this myth almost surely know that they are advocating for their preferred policy on the basis of a lie," he argued.
Specifically, Sen. Elizabeth Warren, D-Mass., and other liberals have been promoting a study from the Center for Economic Policy Research that claims if the minimum wage had been going up in tandem with worker productivity in recent decades, the minimum wage now would be nearly $22 per hour.
However, Dorfman said, that study erroneously uses the productivity gains of all U.S. workers — the nation's entire workforce, including the highly productive technology industry — for its calculations, not the productivity gains of minimum-wage workers who are the sole focus of the hourly pay debate.
He noted almost two-thirds of today's U.S. minimum-wage workers are in the service industry and nearly half are employed in food service.
BLS data show that from 1987 to 2012, worker productivity in the food service sector rose by an average of 0.6 percent per year, while its unit labor costs grew by an average of 3.6 percent, and the federal minimum wage was hiked from $3.35 to $7.25 per hour.
"These numbers reveal not just the selective statistics employed by the proponents of raising the minimum wage, but also that the debate has little to do with helping the poor," Dorfman wrote. "Instead, this is really a debate about income redistribution."
The Wall Street Journal reported seven states in 2014 have raised their own minimum wages, with Michigan being the latest, voting this week to hike its state minimum to $9.25 an hour from $7.40 by 2018.
Democrats are using the minimum-wage debate, and specifically President Obama's effort to hike the federal minimum to $10.10 per hour, to rally their political base,
CNN reported.
"If your member of Congress doesn't support raising the minimum wage, you have to let them know they are out of step and if they keep putting politics ahead of working Americans, you will put them out of office," Obama said in an April White House even orchestrated to focus on the issue, CNN noted.
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