Raising the Minimum Wage Has Unintended Consequences Raising the minimum wage would not necessarily reduce the $7 billion a year that fast-food workers receive in government benefits. A widely reported study by university researchers, released in October, asserted that at least 52 percent of fast-food workers receive benefits from one or more government programs: Medicaid and the Childrens Health Insurance Program; Earned Income Tax Credit; Supplemental Nutrition Assistance Program (food stamps); and Temporary Assistance for Needy Families. The study fueled renewed calls for a significant increase in the minimum wage, which is $7.25 an hour at the federal level. Because pay is low and weekly work hours are limited, the families of more than half of the workers in the fast-food industry are unable to make ends meet, according to the study by researchers at the University of California, Berkeley and the University of Illinois at Urbana-Champaign. They described the $7 billion as the public cost of low-wage jobs in the fast-food industry. But other researchers dispute that, maintaining that if fast-food restaurants raised their wages, that would not guarantee a decline in government benefits, The Wall Street Journal reported. Some restaurants might increase automation and cut jobs, leading to increased benefits for the laid-off workers. In some cases, a workers family members could remain eligible for benefits even if wages were increased. In other cases, workers might reduce their hours in response to a salary hike, and wage increases would boost the earned income tax credit received by some employees, according to the Journal. There are unintended consequences associated with raising the minimum wage, said Michael Saltsman, research director at the Employment Policies Institute, a Washington, D.C.-based think tank. The Journal also pointed out that the $7 billion is only about one-fifth or one-quarter as much as fast-food restaurants pay workers in wages and benefits, and it is less than 2 percent of the total benefits paid out by the four government programs. UCLA economist Jerry Nickelsburg added that studies of the effect of minimum-wage increases are all over the place. The university study also disclosed that the restaurant/food services sector leads all industries in the share of workers with a family member enrolled in one or more public programs, 44 percent. Just 13 percent of fast-food workers receive health benefits from their employers. In Louisiana, 73 percent of fast-food workers and their families receive benefits, the highest percentage in the nation. In California, 52 percent, or 227,000, get benefits. Another analysis, by George Mason University senior scholar Antony Davies, estimates that raising the minimum wage in New Jersey by $1 an hour will increase unemployment by about 2 percent among workers without a high school education.
Posted on: Sun, 01 Dec 2013 16:37:04 +0000
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