A new study has found that in poor neighborhoods, for every $1 increase in minimum wage, there is a 3 percent raise in poverty rates and government dependency.
That’s right. In a shocking turn of events for many liberals, it turns out that economics actually work.
The study, published by the Employment Policies Institute, highlighted the failure of minimum wage laws to reduce poverty.
"...Neither a higher minimum wage nor more-generous welfare benefits have reduced poverty rates in the country’s most-disadvantaged neighborhoods," the study analysis found. "In fact, the authors find some evidence that poverty rates and the share of residents on public assistance have increased alongside a rising minimum wage. (They also find some evidence that, for disadvantaged neighborhoods, the long-run effect of more-generous welfare benefits has been to increase poverty and receipt of public assistance.)"
"To put this in practical terms, it means that each $1 increase in the minimum wage has, in disadvantaged neighborhoods over the past three decades, increased poverty rates and the receipt of public assistance by roughly three percent."
“The clear evidence here is that the minimum wage doesn’t deliver long-run gains and welfare doesn’t deliver long-run gains,” writes study leader David Neumark, director of the Economic Self-Sufficiency Policy Research Institute at the University of California, Irvine.
While the polished economist says his intention is to simply open a new line of research, his findings deliver a blow to the popular argument, specifically from Democrats, that minimum wage laws and welfare reduce poverty. (As MRCTV previously reported, Seattle's finding out the hard way that this theory doesn't work.)
The study also focused on the Earned Income Tax Credit, an alternate welfare program that has drawn support from many conservative-leaning academics that provides a tax refund to low and moderate-income families based on their income and number of dependents. While this most recent study did not find that the Earned Income Tax Credit reduces poverty, Neumark said that in his previous studies, he's discovered some positive effects to the program.
All in all, it appears that many progressives are in need of a basic lesson on economics.