At his website, Senator Bernie Sanders claims, "Millions of Americans are working for totally inadequate wages. We must ensure that no full-time worker lives in poverty. The current federal minimum wage is starvation pay and must become a living wage. We must increase it to $15 an hour over the next several years."
Preston Cooper, fellow at the Manhattan Institute, dug into the Census Bureau's 2015 report on Income and Poverty in the United States, and shows that few full-time workers live in poverty, according to the report he posted last week at Economics 21, the economics research center of the Manhattan Institute. Here's a portion of his explanation"
“Nobody who works 40 hours a week should live in poverty.” This sentiment has been expressed by Democrats from Vice President Joe Biden to Senator Bernie Sanders, and is used to support raising the minimum wage from the current federal level of $7.25 per hour to $12 or even $15 per hour. But the “40 hours a week” mantra misdiagnoses poverty in America. The largest cause of poverty is not low wages but lack of work altogether.
"According to the Census Bureau’s recently released report, Income and Poverty in the United States: 2015, just 2.4 percent of working-age individuals employed full-time and year-round live in poverty, down from 3 percent in 2014. By contrast, nearly a third (31.8 percent) of non-workers were below the official poverty threshold.
"Of the roughly 24 million working-age individuals below the poverty line in 2015, just 2.5 million had a full-time, year-round job. Even this number is likely overstated—the definition of poverty used by the Census Bureau does not take into account taxes and transfers such as the Earned Income Tax Credit, which tops up the wages of low-income workers.
"By contrast, nearly 15 million non-workers—representing 63 percent of working-age people in poverty—were below the poverty line in 2016. Not only are there more non-workers in poverty, but these individuals are also climbing out of poverty at a slower rate. While the number of full-time, year-round workers in poverty fell by 18 percent in 2015, the number of non-workers in poverty fell by just 9 percent.
"Politicians who want to raise the minimum wage argue that it will reduce poverty. But the minimum wage comes with a tradeoff—higher wages for some, but fewer jobs for others as employers cut back on hiring due to heftier labor costs.
"If the goal is poverty alleviation, the tradeoff inherent in raising the minimum wage is not worth it. Antipoverty policy should focus on helping the nine-tenths of working age people in poverty who do not work 40 hours a week and year round. Raising the minimum wage would aid just a small share of those in poverty—while creating even higher barriers to entering the workforce for everyone else."
Below is one of two charts in Cooper's e21 report:
His conclusion is on-point when he says, "To create effective solutions to poverty, we must be honest about its causes. Some people in poverty work 40 hours a week, but focusing exclusively on these individuals misses 90 percent of the problem."
Cooper's entire paper is worth reading, especially since it's fairly short. He includes a second chart showing the percentage of people aged 18-64 in poverty by work status in 2015. Specifically, 63% did not work, 26% worked, but not full-time and/or not year-round. Only 11% worked full-time and year-round.
Forbes magazine contributor Jeffrey Dorfman puts it more bluntly in the first of a two-part series (posted November 19, 2015) explaining "the Democrats misconceptions about the minimum wage." According to Dorfman:
"The three remaining candidates for the Democrat Party had a long discussion about the minimum wage and what it should be raised to during their last debate. Former Maryland governor Martin O’Malley and Vermont senator Bernie Sanders supported raising the minimum wage nationwide to $15 per hour. Former Secretary of State Hillary Clinton played the role of the (relative) grown-up in the room by supporting a raise in the federal minimum wage to “only” $12 per hour. What all three Democrats showed is that they either don’t understand economics or simply cannot speak the truth to the people they need as supporters and voters.
"Sanders made clear the more liberal stance on the minimum wage: “You have no disposable income when you make 10, 12 bucks an hour. When we put money into the hands of working people, they’re going to go out and buy goods, they’re going to buy services and they’re going to create jobs in doing that.” This is the first mistake that liberals make—believing that money in the hands of poor people is better for the economy than the same money in the hands of rich people."
Here are two fact checks from PoliticalFact. The first, dated May 9, 2016, has not Truth-o-Meter, but appears skeptical of raising the minimum to $15 per hour. The second, dated May 4, 2016, addresses Sanders' claim that a $15 minimum wage would reduce federal assistance by $7.6 billion. The PolitiFact's Truth-o-Meter gave Sanders a "Mostly False."
Take a few minutes to write your member of Congress. Tell Congress that alleviating poverty is a worthwhile goal, but they should not pander to special interests. And remind them that higher minimum wages for some results in fewer jobs for others. Contact information is available at the Library of Congress' Congress.gov. Taxpayers living in Virginia's Arlington County can contact:
- Senator Mark Warner (D) -- write to him or call (202) 224-2023
- Senator Tim Kaine (D) -- write to him or call (202) 224-4024
- Representative Don Beyer (D) -- write to him or call (202) 225-4376
Ask for a written response. And tell them ACTA sent you.