Raising the minimum wage is not about lifting people out of poverty

With our own Legislature embroiled in debate over whether or not to increase New Mexico’s minimum wage from $7.50 an hour to $8.50 an hour plus adjusting it annually for inflation, it is interesting to see President Obama jump into the fray over the minimum wage. Obama said, “If you work full time, you shouldn’t be in poverty.” His proposal is to increase the federal minimum wage to $9 an hour.

That got me to thinking. What is a “poverty wage?” And, where would the minimum wage have to be to keep Obama’s word? It’s not too hard to figure it out with the federal poverty guidelines. The guidelines below are for 2013 and include New Mexico. I have added in what a full time job: 40 hours a week, 52 weeks a year, would pay at various levels.

Poverty Level for one person: $11,490

$7.50 an hour (New Mexico’s current wage): $15,600
$9.00 an hour (Obama’s proposed wage): $18,720
$10.29 an hour (Santa Fe’s wage starting March 2013): $21,403

Obviously, it is worth noting that one person can live above poverty on just the minimum wage, so this is yet another silly/ridiculous statement from our President. But, you might say, what about children? The following chart from Pennsylvania illustrates the real income of a single parent. We are working to get a similar chart for New Mexico, but as you can see, with all of the government programs available, things aren’t so bad. In fact, the biggest problem is that due to the generosity of government benefits at relatively low incomes, there are few incentives for single moms (or dads) with kids to get more education and improve their work skills. They actually lose income once they make about $30,000 and don’t start earning more real income until they are making $70,000!