Americans in Poverty and the Minimum Wage Debate

Overview of Poverty in the United States

According to the 2005 population survey conducted by the U.S. Census Bureau, the number of Americans living in poverty rose substantially to 37 million — nearly one in every eight persons. The 12.7% population increase represented an additional 7 million Americans falling into poverty since 2000. Of these figures, 13 million were children living in poverty in 2004 at a rate of 17.8%, which was significantly higher than the rate for the population as a whole. Child poverty in the United States has been two to three times higher than in most other major Western industrialized countries, with 2,019 American babies born into poverty every day.

Current statistics indicate that one in five children is poor during his or her first three years of life — the period when brain development is greatest. Furthermore, a child is born without health insurance every minute. According to the National Center for Children in Poverty, the poverty rate for children is approximately 50% higher than for other age groups.

The Federal Poverty Threshold and Its Implications

The official federal poverty threshold was established at $18,850 for a family of four, based on a standard set by the Bureau of the Census using money incomes that varied by family size and composition. Poverty is defined according to money income before taxes and excludes capital gains and non-cash benefits. The common assumption for most Americans is that a family of four requires approximately $40,000 per year to adequately house, clothe, and feed itself.

A Poverty USA survey found that 40% of the poor in America live in central cities and 36% in the suburbs. It also found that almost 40% of poor people over the age of 16 worked full or part-time but could not earn enough to afford the bare necessities of life. Every year that 14.5 million children continued to experience poverty meant that their lifetime contribution to the economy would decline by approximately $130 billion, because these poor children would receive less education and consequently become less productive workers in later years.

Arguments Against Raising the Minimum Wage

In addressing the problem of poverty, an increase in the minimum wage from the current $5.15 to $6.65 per hour was suggested to Congress; however, critics argued that such an increase would do little to improve the conditions of poor Americans. Few of those who would benefit from it were members of poor families, and the increase would only eliminate entry-level jobs for unskilled workers while making it more difficult for those seeking employment. An increase in the minimum wage, opponents contended, would make low-wage jobs scarce and thus deprive the working poor of additional work opportunities.

An analysis of 2003 U.S. Census data revealed that only 15% — or 7.8 million minimum wage earners — would benefit from the increase, while 72% already had higher family incomes at least 50% above the poverty line. The typical recipient of a raised minimum wage, critics argued, would not be a struggling parent trying to keep a family housed and clothed, but would more likely be a member of the middle class. The analysis further noted that fewer than a quarter of those affected by the proposed new minimum wage worked full time.

Heritage Foundation scholars Robert Rector and Rea Hederman found that only slightly more than one quarter of minimum wage earners worked 2,000 hours or more per year. They suggested that poverty in America was less a matter of material deprivation and more a product of emotional and spiritual loss — the awareness of one's dependence on state and federal bureaucrats and a loss of self-esteem resulting from a sense of self-insufficiency. The working poor, by contrast, were seen as capable of facing their future with optimism and confidence regardless of their earnings, because they retained control over their own lives.