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No, raising the minimum wage won’t create housing affordability

FILE – In this April 1, 2015, file photo, students and other supporters protest on the University of Washington campus in Seattle, in support of raising the minimum wage for campus workers to $15 an hour. Seattle’s $15-an-hour minimum wage law has cost the city jobs, according to a study released Monday, June 26, 2017, that contradicted another new study published last week. (AP Photo/Ted S. Warren, File)

Outside of pushing the Trump-Russia collusion narrative, Democrats as well as several think tanks have been debating over the proposal to raise the national minimum wage to $15 an hour.

In a new study from the National Low Income Housing Coalition, researchers found that only 0.1 percent of minimum wage workers in the United States can afford a one-bedroom apartment. One of the solutions that researchers propose will help alleviate some of this is raising the minimum wage, though they concede it won’t straight up fix the issue because the median wage for affording such an apartment is more than $17 an hour.

Ben Gitis, Director of Labor Market Policy at the American Action Forum, told Red Alert Politics in an interview that there’s a lot wrong with this study. He noted that he’s heard this argument about the minimum wage impeding one’s ability to afford a one-bedroom apartment multiple times a year.

“Honestly, I think this argument is flawed in many ways,” Gitis said. “In their argument, they’re only assuming that the family is only relying on the minimum wage worker’s income, when, in reality, that’s actually not true at all. There are usually several workers in a household to help afford rent.”

He continued. “The average household income of a minimum wage worker is actually about $56,000 from having multiple workers, and about 37 percent of minimum wage workers still live with their parents. And the average household income from those families is over $100,000.”

Gitis noted that about two-to-three people per household on average don’t solely rely on the low-wage earners in which they only get part-time shifts. He said that only 20 percent of minimum wage earners are living in poverty.

“Even among families who can’t afford housing, the important question is would raising the minimum wage actually help them afford it?” Gitis rhetorically asked. “To me, the answer is no for several reasons. Primarily, it’s a very poorly targeted tool.”

Gitis said that they did a report estimating the effects of raising the federal minimum wage to $15 an hour and “estimated that only seven percent of the additional income gained among those who keep their jobs would actually go to people in poverty.”

He continued to say that 14 percent of the additional income gained would go to people who live six times above the poverty threshold. Also, raising the minimum wage would make people richer, but also raise housing demands, which would raise rent and make housing less affordable.

In addition to losing an estimated 6.6 million jobs from raising the national minimum wage, millennials 18-29 years old would be impacted the most since, according to Gitis, a disproportionate amount of minimum wage workers come from that age group. Half of all minimum wage workers are under the age of 25, according to the Bureau of Labor Statistics.

When it comes to uplifting people out of poverty or to a place where they’re financially stable, Gitis has an alternative solution to raising the minimum wage.

“To me, a better solution, now it costs some money, but a better solution to help low income people is to expand the earned-income tax credit because it’s based on the size of the benefit and the eligibility based on household income, so it’s very well targeted rather than some individual wage rate,” Gitis said. “And it encourages work because it basically improves the marginal benefit of working because […] over a certain income range the benefit you receive grows as your income increases.”


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