The Government Shouldn’t Mandate a “Living Wage”
On the last Monday of the legislative session, almost 90 people were arrested in downtown Jefferson City for blocking a street while protesting for economic and racial justice. The group identified itself as the Poor People’s Campaign, and one of its major goals is to raise the minimum wage. Its website states, “We demand the immediate implementation of federal and state living wage laws that are commensurate for the 21st century economy…”
Here at Show-Me Institute, we have written extensively about raising the minimum wage: how it increased unemployment and decreased hours worked in Washington D.C. and Seattle (here is a closer look at Seattle), how it would harm Kansas City workers, and why it actually hurts low-income and low-skilled workers the most. Let’s not forget how a “living wage”—usually pegged at $15/hour—would cost Missouri up to 218,000 jobs according to one study.
Moreover, the American Enterprise Institute put out a study just last month that showed how recent state minimum wage increases that were over a dollar decreased employment among low-skilled workers. Despite all of this evidence, there is still an initiative in Missouri to put a $12/hour minimum wage on the November ballot.
Wanting to improve the lives of poor Missourians is a noble goal, but there are better policies than mandating a higher minimum or “living” wage. For instance, implementing an earned income tax credit in Missouri and pursuing occupational licensing reform could open the door to higher incomes without negatively affecting employment. If organizations like the Poor People’s Campaign really want reforms that will help low-income Missourians, they should abandon the minimum wage and pursue more economically sound policies.