02/29/2024

$15 Minimum Wage Follies in California and New York

Both California and New York have just adopted measures to raise their minimum wages to $15 an hour over the next few years. Los Angeles Mayor Eric Garcetti hailed the increase, declaring, “Today California leads the nation once again, passing a historic minimum wage increase that will help lift millions of hardworking men and women out of poverty.” New York Gov. Andrew Cuomo was pleased too: Not long before signing the legislation, he had been saying, “If you work full time, you shouldn’t have to live in poverty—which is why it’s time for New York to lead the way and pass a $15 minimum wage.” Like many supporters of the increases, both politicians evidently believe that it is an effective anti-poverty policy.

On the face of it, it seems like a no-brainer: Boost a worker’s income enough, the thinking goes, and you’ll push him or her over the poverty line. Working full-time for the current federal minimum of $7.75 per hour, a single mother would earn only about $14,500 per year. That is well under the $19,000-a-year poverty line for a family with a single working adult and two children. Boost her pay to $15, and she’ll be well over it. 

But does this really lift poor people out of poverty? The economic literature strongly suggests not. 

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