Religion & Liberty Online

Few Americans who work full-time are in poverty

20140313__0314wealth1“No one in America should be working 40 hours a week and living below the poverty level,” said Joe Biden last year, “No one. No one.”

That’s a sentiment I share with the vice president. And the good news is that almost no one who works 40 hours a week lives below the poverty level.

That’s the finding of the latest report on income and poverty from the Census Bureau. For those aged 18 to 64 who work full time, year round the poverty rate is a mere 2.4 percent. Those who did not work full-time had a poverty rate that was more than ten times higher—31.8 percent.

But as Preston Cooper points out, the number of full-time workers in poverty may be even less since the definition of poverty used by the Census Bureau does not take into account taxes and transfers such as the Earned Income Tax Credit, which tops up the wages of low-income workers.

Since jobs lift people out of poverty, shouldn’t we support Biden’s proposal to increase the minimum wage? No, because as Cooper notes, “If the goal is poverty alleviation, the tradeoff inherent in raising the minimum wage is not worth it.”

Antipoverty policy should focus on helping the nine-tenths of working age people in poverty who do not work 40 hours a week and year round. Raising the minimum wage would aid just a small share of those in poverty—while creating even higher barriers to entering the workforce for everyone else.

After decades of empirical evidence this connection should be obvious. And yet many Americans still are shocked when raising the minimum wage merely increases the poverty rate. Instead of rethinking their support they double-down, calling for even greater increases in wages which only have the effect of reducing the number jobs available, making it even more difficult for people to escape poverty.

If we truly want to end the cycle of poverty in America we first need to break the cycle of fallacious economic thinking about the minimum wage.

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).