Will Raising the Minimum Wage Reduce Crime?

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

Tags: Economy