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April 30 2014

Transcript from Press Call: Why raising the minimum wage is still a bad idea

Victoria Coley

Independent Women’s Forum

April 30, 2014 • 10:30 a.m. EDT
Press Call Transcript

Why Raising The Minimum Wage Is Still A Bad Idea
More Economic Growth - Not Raising the Minimum Wage - is the Real Key to Rising Wage 

Participants

Sabrina Schaeffer • Executive Director, Independent Women's Forum

Statement of Sabrina Schaeffer, Executive Director, IWF

My name is Sabrina Schaeffer. I’m the Executive Director of the Independent Women’s Forum.

The Independent Women's Forum is a non-partisan, 501(c)(3) research and educational institution dedicated to expanding the conservative coalition, both by increasing the number of women who understand and value the benefits of limited government, personal liberty, and free markets, and by countering those who seek to ever expand government in the name of protecting women. 

Progressives are promoting raising the minimum wage as a commonsense way to alleviate poverty and help women on the brink. And while hiking the minimum wage may sound compassionate, there are serious unintended consequences associated with artificially raising wages, and it’s not fair to hurt the very people who need assistance most.

We all want to solve the real problem of people – especially women – living in poverty. But the biggest reason people live in poverty is not because they’re forced into low-paying jobs. It’s instead because they don’t have consistent, paid employment.

Let’s consider the facts: Minimum wage laws make it illegal for employers to offer someone a job for less hourly pay than the government’s mandated minimum. That means that lower-skilled and less-experienced workers will simply find fewer jobs opportunities as they are priced out of the employment market.

But too often we forget that minimum wage jobs tend to be entry-level jobs, which means that their value is more than just the take-home pay they provide. They are critical skill-building opportunities, allowing workers (especially young workers) to gain valuable work experience that will help them start a career and ultimately earn more. In fact, most minimum wage workers receive pay raises within one year.

What we know is that low wage jobs are not the real source of poverty. Looking at data from the U.S. Census Bureau over more than twenty years, researchers have found that among workers who are 16 and older living in poverty, only 9% had full time work year-round.  And 67 percent had no work at all. Similarly in 2012, 74 percent of households with children living under the poverty line had no full-time worker in that household, according to the U.S. Census Bureau.

It’s also a myth that minimum wage earners are all living in poverty. In fact, less than a quarter of minimum wage earners live in households below the poverty line. That’s because more than half are between the ages of 16 and 24, and most are also enrolled in school. And minimum wage earners under the age of 25 are typically not the family’s sole breadwinner. Instead they often live in middle-class families, which don’t rely on their earnings to make ends meet. One would expect young people to earn less while they gain needed skills and experience.

Progressives advocating for the higher minimum wage argue that this will especially be a win for women, since women make up about two-thirds of minimum wage workers. Yet this statistic reinforces that women are that much more vulnerable to the potential job losses caused by this new regulation.  Women account for nearly two-thirds of part-time workers, and part-time workers are more likely to earn the minimum wage. As the minimum wage increases, many of these part-time workers may find their jobs are eliminated altogether. And that’s definitely bad news for women who sought out part-time work to balance family responsibilities.

And certainly mothers are concerned about job opportunities for their children. Right now the unemployment rate for African-American young adults 16-19 years of age is 36 percent – twice what it is for white teenagers. These women know that first jobs are critical skill-building experiences and are the first step to building a resume for the future.

We all want to do what is fair for hard working Americans, especially in this difficult economic time. But the best way to help those struggling in today's economy is not to raise the minimum wage by a couple of dollars. The real and most fair solution is to focus on creating a growing economy with plentiful job opportunities. This will help unemployed people get paying jobs, boost the prospects of those currently working for low wages, and increase individual worker’s bargaining power.

Ultimately the minimum wage is an inefficient way to try to reduce poverty. Far better for Washington to focus on targeted assistance programs for those who are truly in need. A higher minimum wage, which will only further distort the labor market and make job opportunities more scarce, will ultimately prevent workers from beginning their climb up the economic ladder.

Thank you again for joining the Independent Women’s Forum this morning to hear our concerns about the Minimum Wage Fairness Act to federally-mandate higher minimum wage.

As a reminder, this information and our analysis will be available after this call on the IWF homepage, www.iwf.org.

We will now open the call for questions.  If you have additional questions please contact IWF’s communications director Victoria Coley at victoria@iwf.org.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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