WASHINGTON – The minimum wage either helps the poor out of poverty or fails to correctly address economic issues, depending on which expert was talking at an Economic Policy Institute discussion Monday.
To the 46.5 million Americans who live below the poverty line – 15 percent of the population, the minimum wage is “not extra spending,” said Heidi Shierholz of the Economic Policy Institute, a liberal think tank founded with the help of labor unions that researches policies aimed at improving wages and jobs for the poor and middle class.
Shierholz said there is a misconception that raising the minimum wage, which the Senate recently failed to pass in a close vote, is only a concern of teenagers “working after-school jobs for extra spending money.” Instead, its true benefit is to low-income workers, she said. President Barack Obama said that he would raise minimum wage in his 2014 State of the Union address.
But San Diego State University Professor Joseph J. Sabia said that the minimum wage is “very poorly targeted for those in need.” His studies show adverse effects from raising the minimum wage, he said.
Sabia said that it is too soon to see any benefits of a higher minimum wage, especially during a recession.
“It could put workers on autopilot” and cause them to accept lower-paying jobs or miss out on job opportunities all together, according to Sabia.
Georgetown University public policy professor Harry J. Holzer said also said raising the minimum wage could hurt workers in low-paying jobs.
“Labor markets are more competitive than in the past,” he said. “Labor demand curves are more elastic.”
Holzer said technology is changing what employers need from new workers. Production workers and custodial workers can be replaced by technology so a raise in minimum wage could push employers to stop hiring people for those jobs, he said.
Gordon Berlin, president of social policy research organization MDRC, said that the earned income tax credit plays a larger part in decreasing poverty.
MDRC plans on stimulating New York City’s EITC by partnering with the city’s Center for Economic Opportunity on the Paycheck Plus project. Paycheck Plus is designed to help low-income, single workers without dependent children. By expanding the EITC, the organization said the goal would be more jobs.