Living Wage Nonsense

Originally Published in the Frederick News-Post

A proposed increase in the minimum wage will raise the quality of life for poor Marylanders like eating cheese fries daily will help someone lose weight.

House Bill 988, sponsored by Delegate Aisha Braveboy, D-Prince George's, would raise the minimum wage to $8.25 this year and $9.75 by 2013. It would also expand the number of people to whom the minimum wage applies.

A number of studies show that raising the minimum wage neither spurs the economy nor makes states wealthier. For example, Joseph Sabia of West Point and Richard Burkhauser of Cornell University analyzed minimum-wage increases across the U.S. and found that higher minimum wages did not reduce poverty rates.

But Marylanders do not have to rely on studies for evidence. If living wages made people and places richer, the City of Baltimore should be a shining example of success. It was the first city in the country to pass a living wage in 1994. The population is down more than 100,000 from 1990, and the number of people employed in Baltimore has dropped by tens of thousands in the past decade.

Part of the reason for the exodus of people and jobs from Baltimore is that raising the minimum wage hurts low-skilled workers by making it harder for them to find a job. Again, multiple studies confirm the fact. And Sabia recently published a study for the Employment Policies Institute showing that minimum-wage increases enacted between 1997 and 2007 had minimal impact on a state's economic output and actually decreased it in areas that depend on low-skilled workers.

It makes sense; employers do not live in a vacuum. If they raise wages they must also pay higher payroll taxes and more for workers' compensation. That translates to higher prices for goods and services, which reduce demand for them. So those with jobs may benefit from a pay raise, but employers will have less to spare for expansion.

But facts do not matter to supporters. They make emotional arguments to support an agenda whose goals are disconnected from the realities of making a payroll and how people work.

Bridget Highkin, who works as a server at Cracker Barrel in Bel Air, testified before the Senate Finance Committee that "I'm working hard so I should be able to provide for my family, but I can't count on supporting us on only my wages." According to Progressive Maryland, she works full time but needs food stamps and other government aid to care for her family.

No doubt there are others like her who struggle to provide for their families on a single wage. But the vast majority of minimum-wage workers live in households whose incomes are more than twice the poverty line. That makes raising the minimum wage a poor weapon to eliminate poverty.

Passing the bill would also send another message to employers that Maryland is unfriendly to business at a time the state desperately needs more people and employers to plug the budget deficit. If legislators want to lift people from poverty they need to make it easier to hire them instead of engineering higher wages for a few.