If We Really Followed the Money…..

I recently came across a citation to a fascinating report from the White House Council of Economic Advisors. (Yes, I know I’m a nerd and my reading habits are embarrassingly dorkish…). But it was interesting!

When asked to study the cost/benefit of various crime reduction policies,  the Council responded with data like this:

The authors consider a few ways of reducing crime. They forecast that hiking the federal minimum hourly wage from $7.25 to $12 would reduce crime by 3 percent to 5 percent, as fewer people would be forced to turn to illegal activity to make ends meet. By contrast, spending an additional $10 billion on incarceration — a massive increase — would reduce crime by only 1 percent to 4 percent, according to the report…

They also calculated the true social costs of crime. It totaled almost $308 billion in 2014. So a simple move like raising the minimum wage to $12 doesn’t only reduce crime by 3%-5%, it would save $8 to $17 billion a year.

The problem, of course, is that in the United States, policies are not evaluated and/or implemented based upon any sort of cost/benefit analysis. A continuing influence of this country’s early Calvinism is our predictable analysis of even the most prosaic policies as “moral” issues, requiring determination of “deservedness.” We don’t ask, what would work best? Instead, we ask “How do we avoid rewarding people for behaviors (real or imagined) of which we disapprove?”

It comes back to a conviction–evidently baked into American DNA–that if people are poor, they must be morally defective. Lazy. Unmotivated. Lacking “middle-class values.”

And all of the data that demonstrates otherwise is simply disregarded as the product of wooly-headed liberals.

If we made policy based upon evidence, we would add the projected reduction in crime to the myriad other benefits of raising the minimum wage.

  • Increased buying power and consumer demand (as a result of more people having more disposable income) would drive improved economic performance.
  • According to research, easing the incredible stress experienced by so many low-wage families would reduce familial dysfunctions and even domestic violence.
  • Ameliorating the fiscal pressures that cause poor families to move more often would reduce the disruptive effect on the education of children who frequently change schools.
  • And guess what? We would dramatically reduce the current levels of government outlays for social programs. 

Someone trying to support a family on today’s minimum wage does not even reach the federal government’s poverty line for a family of three. They would make about $14,500 per year. The federal poverty line for a family of three is $18,123. If the minimum wage were increased to a level at which families could sustain themselves, fewer people would end up needing government assistance for housing, food, or health care. This would be a significant benefit to taxpayers and to states’ budgets.

So why is it so hard to raise the minimum wage?

One intriguing theory, from the Economic Policy Institute, is that raising the minimum wage may be seen as a women’s issue.

While increasing the minimum wage would have a sizable impact on both men and women, it would disproportionately affect women. That women comprise 54.5 percent of workers who would be affected by a potential minimum-wage increase makes it a women’s issue… The share of those affected who are women varies somewhat by state, from a low of 49.3 percent in California to a high of 64.4 percent in Mississippi (according to the authors’ analysis of Current Population Survey Outgoing Rotation Group microdata). California and Nevada, also at 49.3 percent, are the only states where women do not constitute the majority of those who would benefit.

I hate to be a cynic, but maybe the disproportionate benefit to women is why we have so much trouble getting it done.

Misogyny? Or just our usual penchant for stubborn ideology over evidence?

24 thoughts on “If We Really Followed the Money…..

  1. Excellent, thank you. Yet I see this attitude toward the poor inherited from British ancestors who glorified it.

  2. Who exactly asked for the study of “the cost/benefit of various crime reduction policies”, why was the information requested (required?) and who was the data reported to? Was anything done with the information other than being read – if it was read – and how much did this particular study cost us in tax dollars? By the way; how many other studies of various and sundry issues have been requested, completed and paid for with our tax dollars only to be ignored?

    “If we made policy based upon evidence, we would add the projected reduction in crime to the myriad other benefits of raising the minimum wage.”

    The powers-that-be in this country obviously don’t need no stinkin’ facts; only need to appear to be doing busy work to earn their far, far above minimum wage paychecks. More government action, “….full of sound and fury signifying nothing.”

    Locally I can point to the 1991 study of abandoned buildings requested by Mayor Hudnut and accomplished with excellent resulting information and recommendations…only to be trashed by Goldsmith. Approximately 4,500 – 5,000 abandoned homes in 1991; approximately 10,000 today. The problem continues locally and has escalated beyond expectation due to the remaining senseless tax law preventing outright purchase of these sites and allowing new owners the right to repair, renovation and reuse which would benefit low income families. This is NOT a separate issue; it is the below minimum wage, low income levels in general causing the initial deterioration of most of these locations and is connected to the severe deterioration of infrastructure in the ignored areas…ignored except for their increasing crime rate, predominantly murders. It all ties in with “follow the money” and it is OUR money being shoveled into these useless or unused study results.

  3. Excellent post today. The idea of it being a women’s issue never crossed my mind. However, now that you have mentioned it I can see that this may be the case. Men would probably rise up as a group and forcefully demand better wages if they were the ones who made up the bulk of minimum wage earners.

  4. Years ago, I spent a couple hours a week working with children in low income housing. I learned something important. The one common denominator was, everyone was poor. That’s all. Some worked hard and and got out asap. Others didn’t. Most of them cared a lot about their children. But they were all poor.

  5. Please show how raising the minimum wage would increase profit or be revenue neutral for a small business, like mine, who will have to pay this 65% increase. Not only does the hourly rate go up, all the payroll taxes go up with it. You’re forcing businesses to absorb the costs of a greater public good, a tax by another name. Will our other taxes go down if the benefits you listed are realized? Heavens no! The politicians will simply find some other ways to spend the money It would be much fairer to stop collecting taxes on anyone making less than a certain yearly income. This would result in much higher take home pay and allow the costs to be spread across the public coffers. If those touted cost savings are realized, those same public coffers will recoup their costs.

  6. Greg Greer; and your solutions would keep your profits up. This is why the 1% and big business, having the advantage of tax loopholes, want to maintain the status quo. My brain will not let go of that $70,000 tax exemption for Mitt Romney’s dancing horse. But the status quo is what the poor and low-income are trying to survive.

  7. Don’t know your business Mr Greer but if it occupies your employees 40 hours a week without paying a living wage you are bring subsidized by the public dole.

    Also if your labor costs went up so would all of your competitors. If you have no other competitive advantage over them then Capitalism says that you shouldn’t be in business.

    You have fallen for GOP advertising that says that they are absolutely incompetent at government which to me is also intuitively obvious. They can’t even run their own party much less states and our country. Fortunately there is another party that still knows how to govern. Hire them. Fire Republicans. Let’s do what works.

  8. One way to look at slavery is that it was a minimum wage job. Instead of pay slaves were given housing, food, clothing, the essentials, though often at sub-standard levels.

    Today business wants the same thing. To pay rather than provide, but keep the pay such that what it can provide is only a sub-standard life.

    Now some might say “Wait a minute! Slavery was a freedom issue not an economic one.”

    Such people have never tried living on a sub-standard wage. The lack of freedom just never goes away.

    Perhaps another way to look at it is the old chicken and egg routine. Minimum wage workers are created by sub-standard education and parenting. Poor neighborhoods contribute to sub-standard education and parenting. We have to start somewhere.

    Capitalists believe that it’s all about opportunity. Let’s give our modern day slaves an opportunity for freedom. Maybe some will escape slavery. Every one that does will be a triumph of human spirit.

  9. From the Washington Post article here ( https://www.washingtonpost.com/news/wonk/wp/2016/04/25/how-to-reduce-crime-without-courts-or-prisons/) outlining findings from the same report by the White House Council of Economic Advisors, “The most effective way to reduce crime would be to spend more money on policing, the report projects. Research consistently shows that departments with more manpower and technology do a better job of protecting the public, and the United States has 35 percent fewer officers relative to the population than do other countries on average” and followed by the economic projection that “Spending an additional $10 billion to expand police forces could reduce crime by as much as 16 percent, they project, preventing 1.5 million crimes a year.”

    It’s difficult to overlook the negative impact on the poor and the minorities following the implementation of former President Clinton’s 1994 crime bill—which among other things, expanded the death penalty, encouraged states to lengthen prison sentences and eliminated federal funding for inmate education

  10. Just look at the representation of women to men in all of the legislative bodies around this country and there is your answer.

  11. Omfg… “It’s misogyny!” *rolls eyes*

    Do you even think before you speak?

    The reluctance to increase minimum wage has to do with the costs to businesses. I mean, this entire article ignores the huge spikes in inflation that follow raises in minimum wage (look it up, this is historical fact), or that many small businesses have to delay or cancel plans for expansions or hiring new people. Corporations can eat up the difference long enough to increase prices and shuffle employment around to their benefit but we’ll just ignore that right?

    I mean, who cares that ALL of the arguments against raising the minimum wage have exclusively been about the cost to business and the economy…. but no, let’s act like idiots and say its sexual discrimination….

    I’m for raising the minimum wage and even I think this piece stinks like pure propaganda. Got to keep the sex/race wars up!

  12. No wonder you’re always disappointed Joe, you are so cynical. A real improvement in both the quality of your life and your thinking would come from trading in your cynical for skeptical; believe what the best evidence suggests.

    Here are a couple of questions a good skeptic might ask.

    What % of total labor costs are paid at minimum wage? What % of GDP is labor costs?

    Inflation? Don’t be ridiculous!

    The peak of minimum wage purchasing power was 1968. Don’t you think that more than a lifetime career without a raise is long enough?

  13. I just read an article today from a former prisoner who said the California correctional system had spent over $900,000 for his incarceration over the years but only gave him $200 and a push out the door when his sentence was completed. He wondered how much better he and all of society would have been if some of that $900,000 had been spent on job training, soft skills on acceptable workplace and social behavior, how to manage personal finances, and assistance to find a job and place to live when he was released.

    We are so often penny wise and pound foolish and pay a huge price in human misery as well as in
    tax dollars.

  14. Going back to the original topic of the post re: the recommendations from the Economic Perspectives On Incarceration And The Criminal Justice System, April 2016, as set forth by the White House Council of Economic Advisors –copied and pasted here ““The most effective way to reduce crime would be to spend more money on policing, the report projects. Research consistently shows that departments with more manpower and technology do a better job of protecting the public, and the United States has 35 percent fewer officers relative to the population than do other countries on average” and followed by the economic projection that “Spending an additional $10 billion to expand police forces could reduce crime by as much as 16 percent, they project, preventing 1.5 million crimes a year.”

    Now, if folks would rather argue about the merits or non-merits of increasing the minimum wage, then argue on; however, for purposes of reducing crime, the White House Council of Economic Advisors report clearly states “The most effective way to reduce crime would be to spend more money on policing.”

    And while we’re discussing crime reduction, let’s remain cognizant that former President Clinton’s 1994 ‘get tough’ crime bill perhaps did more harm to those folks who are minorities or are just plain poor than any bill or policy in the last 20 years. I don’t know if President Clinton’s crime bill (aka the ‘Bubba’ bill) reduced crime even modestly; however, I do know the bill included the “three-strikes” provision which required mandatory life imprisonment without possibility of parole for those who commit felonies if they had two or more previous convictions for felonies or drug trafficking crimes. And, we wonder why there are so many young black men, young Hispanic men, and young poor white men incarcerated in prisons and county jails. Before fretting about raising the minimum wage, I’d be far more pleased about getting these currently incarcerated young men out from behind bars.

  15. Just a couple of short comments:

    (1) If a business can succeed only on the backs of people who are underpaid for their labor, it is already failing – or maybe the owner needs to take a look at his salary and that of top management. (And before someone says $15 is too much for untrained labor, they need to keep in mind that minimum wage today represents a pay cut in terms of buying power from when that minimum was established.)

    (2) Studies have shown that decision-making powers are diminished when people are under chronic stress. The same is true of students who come from poverty-stricken homes. Expecting the poor to “pull themselves up by their bootstraps” and achieve their best potential in school when their energy is taken up by trying to get by day to day is mean-spirited, lacking in empathy, and out of touch.

  16. The prison profiteers who make money running for profit prisons spend plenty of money to make sure their inmate populations stay high including clauses in contracts that the state will make sure they have 90% occupancy rates. Their lobby works to smooth the way. Too many players with vested interests in keeping many in arrested.

  17. If women are economically independent, they won’t have to put up with guys like Disappointed Joe. And that’s a fact. Look it up.

  18. Joe, wages won’t increase overnight as you suppose. They would be phased in allowing time and more for the economy to adjust. Yes, you would have to forego your six ( or seven) figure income and settle for a comfortable middle class life but that is what American is supposed to be. It is well understood that your lifestyle will be destroyed but your style destroys America.

  19. Never thought of this as a womens’ issue, either. Interesting theory. Would make sense. I always felt that the fight over education was a womens’ issue as well. Low pay and micromanagement from the establishment on a profession that is predominantly female.

  20. Earl; I agree with the beginning of your statement but, none of those with six and seven figure incomes will be the loser. People making a higher salary will spend more money and the 1% will continue raking in those six and seven figure incomes. Many, other than Disappointed Joe, have lost sight of the fact that a minimum wage increase to $15 hourly will not be an immediate doubling of worker’s salaries, but spread over a set time frame of years.

    The lack of income spent on goods and services was the reason given for no COLA for Social Security; I’m sure this is true regarding the millions of those employed who received no COLA. One post pointed out that cost for medical care is NOT included in those “goods and services”; including these necessary expenditures would change the picture. And; those making minimum wage also have medical expenses which must be paid from their poverty level income…or foregone entirely.

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