LEVIN: Assembly should reject minimum wage hike to $15

One of Americans’ greatest traits is that we really care about the poor. Most would agree that a responsible, caring society looks after the needs of our most vulnerable, which is the driving reason many advocate increasing the minimum wage. The New Jersey State Assembly is taking up this debate, with the chamber set to vote Thursday on raising the minimum wage to $15.

However, far fewer would agree that financially comfortable households, college students and younger teens are most in need of a government-mandated pay raise. Just what does giving a raise to middle class teens and college students have to do with helping those scraping to get by?

Nothing.

The truth is that a tiny minority of workers — just 2.6 percent — earn minimum wage, with the other 97.4 percent earning more. Of that small fraction, single mothers account for just 6 percent. Yet, if states increase the minimum wage, more than half of that benefit will go to teens or young adults aged 16-24. According to the Pew Foundation, 63 percent of the increases will go to those who are working part time to supplement the family income. In other words, few of the beneficiaries will be those working full time, and even fewer will be struggling parents.

In New Jersey, the average household that includes at least one affected wage earner brings in a combined $77,800. Not exactly the working poor or struggling single parent that altruistic Americans have in mind when considering a minimum wage hike.

Rather than help the least fortunate, interfering with the pay scale would very likely hurt those who need help the most.

The biggest problem struggling mothers face is having no job at all. As President Obama recently wrote on LinkedIn, “When you’re just starting off in the working world, the prospect of finding a job with a blank resume, limited education, and no meaningful connections to employers can be daunting.” A higher minimum wage makes entry-level jobs more attractive to experienced workers, putting that essential first job further out of reach for those trying to gain experience and develop their skills.

Moreover, minimum wage hikes cause harm to job growth. It’s still early to measure the full impact, but preliminary numbers from a study by the American Enterprise Institute found that restaurants in Seattle and Los Angeles saw restaurants close and jobs disappear following a $15 minimum wage hike. In Seattle alone, 900 restaurant jobs were lost, while the rest of the state added 6,200 during the same period. Adding to that impact, fewer new restaurants opened in those cities that raised minimum wage when compared with the rest of the country. To further compound the problem, when businesses closed (or failed to open) not only did those on the higher minimum wage lose their jobs, so did those who earned much more.

Equally damaging to the working poor is that raising the minimum wage puts pressure on prices to rise — particularly at places where lower income shoppers buy food, clothes, and household supplies. The places that hire at or near the minimum wage are largely retail stores — particularly lower-priced stores. So the poor will end up paying for their own raises through higher prices.

What then should caring, concerned Americans do to assure those struggling mothers are able to earn a decent living? First and foremost, we need to make sure any legislation that is passed does not shut down opportunity, so they can get that first job and the skills necessary to move up the ladder. Second, targeted, incentive-based assistance and improving our schools will more directly assist those who seem to be stuck in poverty. Third, we need to revise our perspective on minimum-wage jobs. We should treat these jobs as the best paid internship many can find — the first step to mobility.

Sadly, those who advocate increasing the minimum wage seem to have little faith in the ability of those on minimum wage to move on to better and more fulfilling jobs. With a strong, vibrant economy everyone can and will — as Obama notes — be able to “bridge that opportunity gap.” The State Assembly should heed the president’s words.

Frayda Levin is chair of the board of Americans for Prosperity.