Minimum Wage Earners: Many Still Live at Home

Analysis: Average family income is almost $57,000

In a recent blog post and longer essay I discussed the possibility and implications of a higher Michigan minimum wage (some politicians and unions are talking more than $9.00 per hour), noting that increasing mandated minimums hurt more people than they help.

The Employment Policies Institute of Washington, D.C., has done a state-by-state analysis of the consequences of imposing a $9 minimum wage mandate. EPI has been around for 20 years and is a research institute that focuses its work on entry level employment. Among other findings, EPI reports that nearly 42 percent of all Michigan hourly workers who would be affected by a $9 minimum wage still live with their parents or other relatives

According to EPI, the average family income of these Michigan minimum wage earners is $56,935. This figure underscores how most of these workers are not a “sole breadwinner struggling to feed a family,” which is the image so often portrayed by advocates of an increase. In Michigan, just 6.4 percent of employees who would be affected by a $9 minimum wage are single parents. Nationwide, some 83 percent of minimum wage recipients live with their parents, are married to another earner, or are supporting only themselves.

EPI’s analysis looked at 2012 data from the “Outgoing Rotation Group Current Population Survey Files,” a joint publication of the U.S. Census Bureau and Bureau of Labor Statistics.

We all want to see the rewards for work rise, but forcing employers to pay more than a person’s skill set is worth is an extraordinarily clumsy and counterproductive way to pursue this goal. Minimum wages often hurt people by depriving them of their first job and the work experience needed to advance to higher earnings.

 A study published in the academic Southern Economic Journal found that between 2003 and 2007 higher minimum wages did not reduce poverty rates. The study, titled “Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor,” found that “the working poor face a disproportionate share of the job losses” after minimum wage increases. Theirs is not the only such study to come to this conclusion.

Most minimum wage proponents mean well, but the evidence is clear: minimum wages hurt more people — and particularly low-income people — than they help.