Will Raising the Minimum Wage Reduce Crime?

That’s the argument coming out of left-wing think tanks like the Center for American Progress in support of Obama’s call for a minimum wage hike. The argument is seductive, but deeply flawed.

First, much of the gun violence is gang related, especially in Chicago, which is the subject city of the minimum wage argument. A report drawing an analogy between El Salvador and Chicago based on income inequality is interesting, but not for the income inequality buzzword, but the slow acceptance of the fact that immigration from El Salvador has exported its violent criminal culture and gang violence into the United States.

Gang violence has economic and cultural components. It is somewhat simplistic to believe that raising the minimum wage by a few dollars in a bad economy will knock gang culture on its ass. Especially when gang culture involvement can begin at 13 to 16 years of age.

 

Second, the report makes the claim that “the majority of increases in violent crime can be explained by downward wage trends”, and even assuming this is true, it does not mean that inverting the process will equally well slash violent crime.

The problem is that while falling wages might squeeze some minority teenagers off the economic ladder, raising minimum wage has been shown to decrease minimum wage jobs which would actually put more teenagers into the street and the gang life.

Economists have found that a minimum wage hike leads to increase unemployment and lost jobs.

During the last series of wage hikes to $7.25 from $5.15 that started in July 2007 as the economy was headed toward recession. The last increase hit in July 2009 just after the recession ended, and as the nearby chart shows, the jobless rate jumped for teens and black teens especially. For black teens, the rate has remained close to 40% and was still 37.8% in January.

A study by economists William Even of Miami University and David Macpherson of Trinity University concludes that in the 21 states where the full 40% wage increase took effect, “the consequences of the minimum wage for black young adults without a diploma were actually worse than the consequences of the Great Recession.”

If low income generates crime, then more unemployment would generate even more crime.

The left can blame crime on low wages, but raising wages does not create jobs and in a bad economy where businesses are already operating with low margins, higher wages get swapped for more jobs. You can have one or the other in a bad economy, but you most certainly cannot have both.

The more jobs or higher wages is an existing balance in any economy, but in a bad economy where urban jobs are already balanced precariously between big companies looking to outsource and small businesses nervous about expanding in a bad economy, the balance is unlikely to somehow shift so that better paying jobs will be created at a higher rate than lower paying jobs were before.

Will moving 4 workers into a slightly higher income category, while pushing 1-2 workers out of the economy really stop crime or make it worse?

  • slider 96

    Great Picture Daniel , so appropo to this really pure proganda article . So I guess by your rationale , if the rich are making more money ….crime will go down ? Funny I always thought that jobs are not created by the rich , jobs are created by increased demand , and that by more expendable income in the hands of people making a LIVING WAGE .
    The rich have been doing very well these last 5 or 6 years and that's a fact …..so where are tyhe jobs that " the rich create ".

    You know daniel when I gloss down the list of articles and Titles ,before I see the authors , I am able to pick yours correctly 7 or 8 times out of ten

    • Mary Sue

      Except that your perception of "the rich" is incorrect…a lot of small business owners that provide the majority of jobs are not in fact hiding rolls of 100's in their socks or in a jar on their dresser.

    • Daniel Greenfield

      "So I guess by your rationale , if the rich are making more money ….crime will go down ?"

      Not really. I don't accept the leftist premise that crime is purely a creature of economics. And if I did accept that premise, then the issue would not be the rich making money.

      ", jobs are created by increased demand , and that by more expendable income in the hands of people making a LIVING WAGE "

      They can be, but it's a bit more complicated than that. Demand is driven by an expanding middle class. For the middle class to expand, it has to have a place to start from and a place to go. And its demand for products has to be primarily domestic. Otherwise it's just the King of Spain all over again.

      • slider 96

        Not at all Daniel , I believe that the crime rate has nothing to do with the rich , the poor or the minimum wage. I do not believe the Rich by getting richer supply more jobs .The rich are not in the buisiness of creating jobs . Nor do I think whether or not the rich get taxed at a higher rate will eliminate jobs . Demand is driven by the amount of money people have in their hands to spend , middle or lower class , they all need and desire basically the same things . Increasing the minimum wage will expand the amount of people who have the money to spend , and yes there will be some employers who will not hire , but they will be far outweighed by those who do , and that by increases in demand . I agree …it must be domestic , if we are to get jobs back .
        If we were to use standards of 1968 ,then the minimum wage should be $11.50 . Since then , although productivity has steadily increased the gaines made by middle and lower class full time laborers have decreased .A living wage is a starting point .

    • dickymo johnston

      Today's phrase is "non sequitur." Jobs are not created by increased demand but by people doing something productive, being rewarded, and then exchanging the compensation for that reward with others. It's the difference between Keynesian economics and Say's law. Investment creates jobs and, when productive, a higher standard of living. We demonize the successful job creators, rely on government spending, which pols always call "investment" now, and wonder why our economy is so dismal. A higher "minimum wage," which increases costs, won't lead to more hiring.

  • slider 96

    Whatever "left wing think tanks " you are quoting , have arguments just as faulted as your assumptions . When I first started working , minimum wage was $1.40 an hour and a new Chevy cost $2800. Funny minimum wage has nothing to do with hospital costs going up 30% every three years , just as unemployment has nothing to do with minimum wage .
    Don't be as dumb as those lefties in believing this tripe . I agree with you on the cause of the violence you cited ….and that's our fault …we have revolving door justice .How is it a criminal with a rap sheet of 30 or 40 arrests is still on the streets ?

    • Daniel Greenfield

      Minimum wage obviously is related to unemployment since it's a business cost. Hospital costs are an expense.

      It's not just revolving door justice, though that's part of it. Gangs use younger members to commit crimes because they know their sentences will be limited.

      • slider 96

        The gangs you cite are most definitely a factor in the crime rate , and we have failed to adress them properly .. Yes it has gotten out of hand in Chicago , LA , and even in small midwestern towns . The law needs to catch up to reality , a 13 year old can pull a trigger just as well as a 30 yr old . Looking at rap sheets can tell us one thing , a single person can be a one man crime wave in a neighborhood . Multiply that by a gang and then you have a serious problem . Add to that , illegals who are part of those gangs and it gets worse.

  • http://www.adinakutnicki.com AdinaK

    Garbage in is garbage out. In plain English, stats are fungible. The left uses them as if they are disposable tissues, but they mean nothing. The more employers are forced to cough up, the less jobs created. The left answers all ills with squeezing businesses, and they double dip when their coffers need filling.

    In any case, if anyone believes that a few bucks more, here and there, will keep someone with criminal proclivities from crime, then there is nothing left to argue. Leftist dogma is immutable, it leaps tall buildings too – http://adinakutnicki.com/2012/07/01/leftist-dogma

    Adina Kutnicki, Israel http://adinakutnicki.com/about/

  • John C. Davidson

    Most of the jobs the Liberfals promote rely on someone else's weath to pay for them.

    • klystronfm

      Too right, look at this:
      "About $59 billion is spent on traditional social welfare programs. $92 billion is spent on corporate subsidies. So, the government spent 50% more on corporate welfare than it did on food stamps and housing assistance in 2006."

      Tax breaks targeted to benefit specific corporations could also be considered a form of welfare. Tax loopholes force other businesses and individual taxpayers without the same political clout to pick up the slack and sacrifice a greater share of their hard-earned money to decrease the financial burden on these corporations. However, to simplify matters, we’ve only included financial handouts to companies in our working definition of corporate welfare.

      Whenever corporate welfare is presented to voters, it always sounds like a pretty reasonable, well-intended idea. Politicians say that they’re stimulating the economy or helping struggling industries or creating jobs or funding important research. But when you steal money from the paychecks of working people, you hurt the economy by reducing their ability to buy the things they want or need. This decrease in demand damages other industries and puts people out of work.

      Most of the pigs at the government trough are among the biggest companies in America, including the Big 3 automakers, Boeing, Archer Daniels Midland, and now-bankrupt Enron.

      Try to ensure you know what you are talking about, John.
      http://thinkbynumbers.org/government-spending/cor

  • tagalog

    The minimum wage has been raised, in both federal and state legislation, many times over the years.

    Have the earlIer raises of the minimum wage resulted in a decrease of crime?

    QED.

  • cxt

    The Left has always been bad at math/econ. Wages have very little to do with crime in genera and violoent crimein specific.

    The Left also has a VERY short memory. Was watch a show the other day and they had on a professor that has written a book about the number of people in jail for drug crimes—specifically about the number of minorities jailed under the War On Drugs. She seemed utterly unaware that minorty leaders were the ones pushing for heavy jail time for drugs during the crack epidemic.

  • klystronfm

    The left has always been bad at math????!!!!

    uh, what were the cost estimates again, for the Iraq invasion? Pull your head from the vacuum -wait for the 'pop'- and then try again.

  • klystronfm

    $200 million, he mumbles back…