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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Wonkblog Makes the Case Against a Federal Minimum Wage in One Chart



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Wonkblog features the following chart, showing what minimum wage, working 40 hours a week, is necessary to reasonably afford an approximately median-priced one-bedroom apartment working 40 hours a week, in every county across the country.

I’ll explain below why this doesn’t tell us much about poverty. It actually says a lot more about the problems with setting federal economic policy, as Heritage’s Salim Furth points out on Twitter: The price of housing and the cost of living varies wildly across America — in some places, it’s double what it is in others. Why have a federal law trying to set the base price of labor everywhere?

Now, in another way, this looks like the case for raising the federal minimum: In literally every single county, the wage required is higher than the federal minimum wage, $7.25 an hour. As Wonkblog points out, though, this isn’t as dire as it sounds since this is (approximately) housing prices in the 40th percentile of pricing, so lots of units are cheaper. What they don’t mention is that these people’s incomes are augmented by a wide range of welfare benefits — both in-kind benefits like food stamps and cash tax benefits — meaning they can spend more on housing than most people do, and that few minimum-wage earners are breadwinners in their families.

All of those are reasons why the chart can’t tell us much about whether the working poor can afford housing in America. But it does suggest that the cost of living (and the value of labor) varies so widely that a much higher federal minimum wage that has little effect in some places (both in terms of raising wages and keeping people out of the labor force) may have huge effects in others. Liberals might think the benefits of the minimum wage are usually worth the costs, but this is harder to be sure about when the costs in some places may be dramatically greater than they are in others.



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