California’s at it again.
On Labor Day, Los Angeles mayor Eric Garcetti is expected to announce a three-year series of hikes to the city’s minimum wage that will raise it to $13.25 an hour, according to the Los Angeles Times.
A labor activist, Maria Elena Durazo of the Los Angeles County Federation of Labor, applauded the move, telling the Times, “There is a crisis in wages for the working poor and we feel strongly about the largest increase as soon as possible.”
But will the hike ultimately help low-income men and women in Los Angeles?
That’s not so clear. First, let’s be clear: most employees aren’t working at minimum wage for years, even in low-skilled jobs. “Two-thirds of minimum-wage workers make above the minimum wage a year later,” wrote Heritage Foundation’s James Sherk in an issue brief released in January.
“This happens because most minimum-wage jobs are entry-level positions,” Sherk explained. “They teach unskilled and inexperienced workers basic employment skills. Without these skills, they cannot qualify for higher-paying jobs. As they acquire these skills, they become more productive and can command higher pay.”
Furthermore, minimum wage workers may not be who you think they are. Many of them are teens and young adults. And among those who are working minimum wage jobs and are 25 or older, the average family income is $42,462, according to Heritage Foundation research. To put that number into context, the official poverty level for a family of four is $23,850.
A higher minimum wage rate can also lead to unintended consequences that hurt low-income Americans. “Higher minimum wages both reduce overall employment and encourage relatively affluent workers to enter the labor force,” Sherk said in testimony before a Senate committee last year. “Minimum wage increases often lead to employers replacing disadvantaged adults who need a job with suburban teenagers who do not.”
“Studies also find higher minimum wages do not reduce poverty rates,” Sherk added.
It’s laudable to want to help Americans struggling economically. But a minimum wage hike, while sounding good, could backfire and hurt the very people it was intended to help.