Editorial: Minimum wage hike will increase prices and crime

Despite all the evidence that it will do more harm than good, a bill to raise the minimum wage in Nevada is still wending its way through the halls of the Legislature in Carson City.

Assembly Bill 456 would raise the minimum wage 75 cents per hour each year as it climbs from the current $7.25 per hour for those receiving company health insurance and $8.25 for those not insured until it reaches $11 or $12 per hour.

In his State of the State speech, Democratic Gov. Steve Sisolak called for raising the minimum wage and declared, “It’s impossible for an individual, let alone a family, to live on $7.25 an hour,” ignoring the fact almost no one “lives” on minimum wage. Fewer than 3 percent of workers are paid the minimum wage and most of them are under age 25 and working part-time. Most are supplementing family income rather than being self-supporting.

In fact, raising the minimum wage often results in jobs being cut and/or working hours reduced. One study found the average low-wage worker in Seattle lost $125 a month because the minimum wage was raised to $15 an hour.

Now, a recent study released by the National Bureau of Economic Research found that raising the minimum wage can harm even those who are not being paid the minimum wage.

Using national crime data from 1998 to 2016, the study found “robust evidence that minimum wage hikes increase property crime arrests among teenagers and young adults ages 16- to-24, a population for whom minimum wages are likely to bind.”

The study projects that raising the minimum wage to $12 an hour nationally would result in approximately 231,000 additional property crimes, costing the nation $1.3 billion. Raising the minimum wage to $15 an hour would generate over 410,000 additional property crimes and $2.4 billion per year in additional crime costs.

“We conclude that increasing the minimum wage will at best be ineffective at deterring crime and at worst will have unintended consequences that increase property crime among young adults,” the study authors concluded. They said that previous studies that projected a decrease in crime due to raising the minimum wage ignored the possibility of hours being cut and jobs being lost.

Don’t ignore the costs imposed on everyone when the minimum wage is hiked. A Cato Institute analysis in 2012 found that a “comprehensive review of more than 20 minimum wage studies looking at price effects found that a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent and overall prices by up to 0.4 percent.”

The Congressional Budget Office in 2014 estimated that if the federal minimum wage were increased to $10.10 an hour — as proposed by President Obama and others — up to a million workers would lose their jobs.

According to the American Enterprise Institute, when the minimum wage rose 41 percent between 2007 and 2009, the jobless rate for 16- to 19-year-olds increased by 10 percentage points, from about 16 percent in 2007 to more than 26 percent in 2009 — even higher for minorities.

Without those entry level jobs younger Americans cannot build the skills needed to earn higher pay for a lifetime.

Still another Heritage study reported that every dollar increase in minimum wage really only raises take-home pay by 20 cents once welfare benefits are reduced and taxes are increased.

It’s the immutable law of unintended consequences. Lawmakers should abandon their support for this bill, which would cause more harm than good.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

7 comments on “Editorial: Minimum wage hike will increase prices and crime

  1. Bruce Feher says:

    I’ll give you this Tom; you’re consistent!
    As usual you’re making sense!
    Politicians love to make fake promises because they make great ‘sound’ bites. Forget about reality, our officials bank the on the average citizen being more interested in diversions lake entertainers and athletes than what really matters and that’s usually a safe bet!

  2. Great editorial Tom.

    You may also enjoy the work of Jonathan Meer. I was stunned to discover that there has been essentially no work studying the effect the minimum wage has on job growth, until Meer recently filled in that gap.

    Given how most minimum wage hikes are relatively small and announced a year in advance, it always seemed like the real effect would have been on that which is unseen: the jobs that never came into existence, rather than a wave of layoffs after the minimum wage employers knew was coming finally took effect.

    Sure enough, that’s what Meer found:

    Taken at face value, our most restrictive model, the break-in-trend
    specification, suggests that a 10% permanent increase in the real minimum wage reduces job
    growth by about 0.3 percentage points annually, or about 15 percent of the baseline level.
    This effect is not small, and extrapolated sufficiently into the future this implies a deleterious
    effect on employment of enormous magnitude, far surpassing that of any historical recession.

    https://www.nber.org/papers/w19262

  3. Steve says:

    Like I have said, raising the floor makes a taller basement.

    Nice to see the linked site is least biased. nber.org.
    https://mediabiasfactcheck.com/national-bureau-of-economic-research-nber/

  4. […] Source: Editorial: Minimum wage hike will increase prices and crime […]

  5. Rincon says:

    You’re still citing Heritage Foundation studies? Then why aren’t you reading Greenpeace and Marx? They’re just as valid. https://mediabiasfactcheck.com/heritage-foundation/

    As for minimum wages, I don’t like ’em either. Work for the dole, otherwise known as guaranteed jobs, are a better alternative, but it amazes me that, when our minimum wage in 1968 was about $13.00/hour in today’s dollars, and our productivity today per person is near double, that you Conservatives somehow think we just can’t afford it. The evidence says we can quite easily.

  6. […] a recent study released by the National Bureau of Economic Research found “robust evidence that minimum wage […]

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