Discredited Researchers Promote Myths To Fearmonger That Increased Wages Will Lead To Higher Crime Rates

WSJ Editorial: Raising Wages Would Be “Disastrous” For Philadelphia Teenagers. Economist Mark Perry of the conservative American Enterprise Institute and Michael Saltsman of the Employment Policies Institute -- a right-wing industry front group opposed to minimum wage increases -- claimed that raising the minimum wage would lead to higher teen unemployment in a July 26 op-ed in The Wall Street Journal, and that elevated unemployment levels would in turn lead to more crime. The authors, who are notorious for spreading misinformation about the minimum wage, used the setting of the Democratic National Convention in Philadelphia to claim that increased wage standards could be calamitous for the state of Pennsylvania. From The Wall Street Journal (emphasis added):

The direct and immediate consequences of a higher wage floor on the entry-level job market are well known: fewer jobs for fewer people. Less discussed are the longer-term adverse outcomes for young people who can no longer find work at artificially high wages. If delegates to the Democratic convention in Philadelphia this week need a striking example of why a 107% increase in the federal minimum wage to $15 an hour is a bad idea, they need only travel a few miles north of the city’s convention center on Broad Street.

In the heart of North Philadelphia … the unemployment rate for teenagers averages 42%, according to 2014 data.

[...]

The city’s north side faces these crisis-level rates of youth joblessness with a starting wage—$7.25 an hour—that’s consistent with the historical inflation-adjusted average minimum wage in the U.S. of $7.40. If anything, the current minimum wage is too high, given the large numbers of unemployed youths who can’t find a job. The consequences of more than doubling it to $15 an hour would be disastrous.

By significantly reducing the available stock of job opportunities at the bottom end of the career ladder, a higher minimum wage increases the likelihood that unemployed teens will seek income elsewhere. A 2013 study by economists at Boston College analyzed increases in state and federal minimum-wage levels between 1997 and 2010. It found that low-skill workers affected by minimum-wage hikes were more likely to lose their jobs, become idle and commit crime.The authors warn that their results “point to the dangers both to the individual and to society from policies that restrict the already limited employment options of this group.”

This troubling outcome is one that U.S. cities can barely afford. North Philadelphia already struggles with some of the city’s highest rates of violent crime. In 2016 homicides in Philadelphia are up 10% over this time last year, and the Journal and other news outlets have reported that other U.S. cities are facing similar challenges. A May report from the Congressional Budget Office finds that one in six young men nationwide is either unemployed or incarcerated; among young black men, this figure jumps to nearly one in three. The CBO report pointed to higher minimum wages as one possible cause of this crisis. [The Wall Street Journal, 7/26/16; Media Matters, 2/1/16, 8/5/13]

The Vast Majority Of Minimum Wage Workers Are Not Teens

BLS: 55 Percent Of Minimum Wage Earners In 2015 Were At Least 25 Years Old. According to the Bureau of Labor Statistics (BLS), in 2015, of the more than 2.5 million American workers paid at or below the federal minimum wage of $7.25 per hour, more than half were aged 25 and above, representing 1.4 million people. Teenagers ages 16 to 19 represented 28 percent of minimum wage workers in 2002 and have since declined to 19 percent of all minimum wage workers by 2015. [Bureau of Labor Statistics, BLS Reports, Table 7, April 2016]

EPI: Low-Wage Workers Are “Not Predominately Teenagers.” The Economic Policy Institute (EPI) published a report on the demographics of low-wage workers on April 27, 2012, which found that most are not teenagers. EPI found that less than a third of low-wage workers live in households making more than $50,000 a year, revealing that they are “not predominately teenagers living with their parents”:

• Female, young, and minority workers are overrepresented in the ranks of low-wage workers, when “low-wage” is defined as below the wage that a full-time, full-year worker would have to earn to live above the federally defined poverty threshold for a family of four. (In 2011, this was $23,005 per year, or $11.06 when adjusted to hourly wages.)

• In 2011, only 31.5 percent of low-wage workers lived in households with a family income greater than $50,000, indicating that low-wage workers are not predominately teenagers living with their parents or adults with low-paying jobs living with a higher-earning spouse.

[Economic Policy Institute, 4/27/12]

CEPR: Minimum Wage Workers “Older And Better Educated Than Ever.” The Center for Economic and Policy Research (CEPR) revealed in an April 2012 report that from 1979 to 2011, the “average age of low-wage workers increased 2.6 years, from 32.3 to 34.9,” reflecting “a big drop in the share of low-wage workers who are teenagers,” which is down to 12.0 percent. It also reported that the share of low-wage workers with some college education increased from 19.5 to 33.3 percent and an additional 9.9 percent of low-wage workers had completed a college degree, up from just 5.7 percent in 1979. [Center for Economic and Policy Research, April 2012]

Economists Have Repeatedly Debunked Claims That Better Wages Kill Jobs ...

CEPR: Increasing The Minimum Wage Has “No Discernable Effect” On Employment. In an exhaustive report that reviewed dozens of individual studies and meta-analyses of the minimum wage to gauge the relationship between increased minimum wages and employment, the Center for Economic and Policy Research (CEPR) concluded in February 2013 that local, state, and federal minimum wage increases had a negligible effect on job creation. One of the meta-studies in CEPR's review was a 2009 peer-reviewed paper by economists Hristos Doucouliagos and T.D. Stanley, which plotted the estimated jobs impact of 1,492 separate calculations contained in 64 distinct studies. The paper found that the overwhelming majority of the “most precise estimates” of positive and negative jobs impacts were “clustered at or near zero”:

[...]

Economists have conducted hundreds of studies of the employment impact of the minimum wage. Summarizing those studies is a daunting task, but two recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers. [Center for Economic and Policy Research, February 2013]

IRLE: Increased Minimum Wages Had Zero Effect On Employment. The University of California, Berkeley's Institute for Research on Labor and Employment (IRLE) in April 2012 looked at the link between raising minimum wages and job creation. The IRLE found no change in job growth tied to raising minimum wages:

Summarizing to this point, we find that our border-discontinuity estimates find strong positive responses of earnings to a minimum wage increase. This rise in earnings is met with a change in the employment stock that is indistinguishable from zero. [University of California, Berkeley, Institute for Research on Labor and Employment, April 2012]

… And Found No Major Effect On Teenage Employment Rates

IRLE: Minimum Wage Has Nothing "But Very Small” Effects On Teen Employment. The Institute for Research on Labor and Employment (IRLE) concluded in an April 2011 report that the effects of minimum wage increases had “very small negative long-run effects” on teen employment:

Traditional estimates that often find minimum wage disemployment effects include controls for state unemployment rates and state- and year-fixed effects. Using CPS data on teens for the period 1990-2009, we show that such estimates fail to account for heterogeneous employment patterns that are correlated with selectivity among states with minimum wages. … Including controls for long-term growth differences among states and for heterogeneous economic shocks renders the employment and hours elasticities indistinguishable from zero and rules out any but very small disemployment effects. Dynamic evidence further shows the nature of bias in traditional estimates, and it also rules out all but very small negative long-run effects. [Institute for Research on Labor and Employment, University of California, Berkeley, April 2011]

EPI: “The Warnings Of Massive Teen Job Loss Due To Minimum Wage Increases Simply Do Not Comport With The Evidence.” Economist Heidi Shierholz argued in a November 25, 2009, essay for the Economic Policy Institute (EPI) that teen employment is affected more by broad economic trends, like a recession, than by changes in the minimum wage:

While it is true that there is some disagreement among economists about whether increasing the minimum wage increases or decreases employment, there is a consensus on the essential point: the impact of a minimum wage raise on jobs, whether positive or negative, is small. The warnings of massive teen job loss due to minimum wage increases simply do not comport with the evidence. [Economic Policy Institute, 11/25/09]