To Help The Poor, To Not Help The Poor

Republicans in the Senate blocked legislation this week that would increase the federal minimum wage. Currently, the federal minimum wage level is at $7.25 an hour and the failed proposed increase would have raised it to $10.10 an hour. Democrats promoting the bill claimed it was a strong way to combat poverty.

The expected outrage at the failure of the bill included sound bites from an angered Obama aimed at Republicans, saying, “They said ‘no’ to helping millions working their way out of poverty.” Republicans responded to the many criticisms citing the CBO report showing that 500,000 jobs were expected to be lost if the increase was passed.

Though that is a great argument to make since it is quite difficult to work your way out of poverty if you no longer have a job, it is not the only one. The options for a business owner that is presented with a forced increase to labor costs include raising prices and cutting hours as well as cutting jobs entirely.

So, from the view of a poverty stricken minimum wage worker these options look just as bad. They are faced with an increase in the prices of goods and services they need. Not to mention they now run the risk of having their hours cut or losing their job entirely.

How many people in poverty would see an increase in pay because of this bill? According to the Census Bureau, in 2012, nearly 60% of those living at or near the poverty level were not in the workforce, meaning an increase in wage would not help.

The data look worse once you look at the average minimum wage worker. Most are from households far above the poverty line, proving the old adage that most people working minimum wage jobs are teens or college kids.

All of this just proves the point that a wage increase is not an effective way to help the poor. Considering the statistic that about 60% of the poor are not in the workforce, a better way to approach ending poverty might be to get people working.

Many argue that making it easier to go to college will solve this problem. The same set of data from the Census Bureau, however, show that 24.6% percent of people at the poverty line have either some college or an associates degree. Once you compare that with total population, 26.7%, it is clear college might not be the golden answer.

Meanwhile, there are millions of skilled labor jobs that can not be filled. Just check out Mike Rowe’s foundation for more on that debate. If Democrats and Republicans really want to do something about poverty they need to think outside of the ‘talking points’ box.

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