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!

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4 Replies to “Raising the minimum wage is not about lifting people out of poverty”

  1. Minimum wage is a violation of the US constitution. (regardless of what the courts say) It takes away the freedom to work on your own terms. Some of those who will be unemployed will turn to crime. The constitution says “secure the blessings of liberty” and “insure domestic tranquility” Perhaps judges skipped the first paragraph when they read the constitution.

  2. Poverty mentality is a difficult habit to break and government imposing some arbitrary ‘poverty wage’ will not alleviate the misery.

    Government does one thing exceptionally well, it is master at the art of infantilizing humanity.

  3. In our business, we have found that the higher the minimum wage is, the less productive work we see out of our employees. We have to baby sit them for the most part and then find that they did not do the job right after they have gone home. Therefore we have to finish it or re-do it. The work ethnics of most now days is very low. Minimum wage is not meant to make a living on. It is a starting point to get in the workforce. There are ways in place to “move up the work ladder” through hard work and education, not hand-outs. Our small business pays out so much in payroll and taxes already, it is hard to make a living.

  4. I have always maintained that until being on welfare does not pay more than getting a job, you will have people whose “job” is being on welfare. (I am referring to those who could work and choose not to, not the mentally handicapped or totally disabled people.) As I look at the chart, it seems that on average, someone on welfare is getting an additional $20K from the rest of us taxpayers.

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