Even With Minimum Wage Hike, Some Full-Time Workers Would Remain Below Poverty Level

January 30, 2012 3:28 pm ET — Jamison Foser

State Senator Tom Libous

New York State Assembly Speaker Sheldon Silver is proposing a 17 percent increase in the state's minimum wage, to $8.50 an hour. While that would be a welcome bump for New York's minimum-wage earners, it would still leave a full-time employee earning about $17,000 a year. A single parent of two working 40 hours a week 51 weeks a year would earn $17,340 — less than the federal poverty threshold for a family of three. Such a worker currently earns $14,790 — less than the poverty threshold for a two-person family. As Silver notes, "When you work full time at the minimum wage, you are poor in New York. ... You're not making enough to get by. We want to have people able to support their families, plain and simple."

And yet, with sad predictability, some New York conservatives oppose the wage increase:

But opponents say it could hurt low-income earners and small businesses, by raising the cost of doing business, which could lead to layoffs.

"The national minimum wage went up, and in the United States of America the economy's the worst it's been since the Great Depression," said Senator Tom Libous, a Binghamton Republican. Mr. Libous said he was skeptical of studies suggesting that increasing the minimum wage spurs economic growth.

"I think that's a lame theory that doesn't amount to much," he said.

Libous's attempt to blame the federal minimum wage increases for a struggling economy is absolute nonsense. Those increases didn't cause the housing bubble to burst, and they aren't why business aren't hiring. As for the "lame theory" that an increase in the wage could spur economic growth, there's actually sound logic behind it:

Further, raising the minimum wage has potentially positive effects on the American economy. Heidi Shierholz explained that raising the minimum wage puts money in the hands of American workers, sparking consumer spending crucial to economic recovery. A minimum wage increase would shift money away from corporate entities disinclined to spend money and toward Main Street.

Raising the minimum wage, therefore, could serve as economic stimulus, as well as ameliorate conditions for Americans living in poverty. "An increase of the minimum wage from $7.75 to $8.25," Shierholz noted, "would give 10 million workers a raise," and could stimulate economic growth to the tune of 50,000 new jobs.

Remember: Corporate profits have actually been quite strong in recent years, which means employers are able to absorb the additional costs that would be associated with higher wages. Meanwhile, employers aren't hiring because of the lack of demand for their goods and services, which would increase if low-wage workers had more money to spend. Given current economic conditions, the case that a minimum wage increase would be stimulative is far more compelling than the claim that previous wage increases led to the economic collapse in the first place.

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