“There is nothing new under the sun.” The oft-quoted saying from the book of Ecclesiastes is especially true of John Edwards’ well-intentioned but misguided “poverty tour.” Edwards’ proposals to help the poor are nothing more than a remix of Franklin Roosevelt’s “New Deal” and Lyndon Johnson’s “War on Poverty” and, like those previous initiatives, miss the mark.
Government wealth redistribution schemes, larger labor unions, and expanded government social programming have never helped the poor in the past and will continue to fail the truly disadvantaged in the future.
Raising the minimum wage does not help the poor over the long term. It is emotionally comforting to assume that arbitrary wage inflations will give the poor more cash but, in fact, the economics don’t work that way.
James Sherk of the Heritage Foundation reminds us of three important truths. First, the only workers who benefit from a higher minimum wage are those who actually earn that higher wage. A higher minimum wage causes employers to cut back on both the number of workers they hire and their employees' working hours, which reduces overall job opportunities for the poor.
Second, few minimum-wage earners actually come from poor households. The beneficiaries of higher minimum wages are unlikely to be poor because most minimum-wage earners are not poor—they tend instead to be groups such as suburban teens. Third, the poorest of Americans do not work at all, for any wage, so raising the minimum wage does not help them. The raise actually guarantees that the truly disadvantaged remain unemployable. Sherk reports that each 10 percent increase in the minimum wage reduces employment in affected groups of workers by roughly 2 percent. Thus, raising the minimum wage to $7.25 an hour could cause at least 8 percent of affected workers to lose their jobs in the long run. Real wages rise when there is a proliferation of free enterprise creating greater competition between employers for low skilled labor.
Labor unions don’t help the truly disadvantaged either. America’s labor unions exist to promote their own protectionist interests instead of the interests of the unskilled, common man. Labor unions love minimum wage increases because they make unskilled labor too expensive for employers. As a result, says Sherk, skilled labor becomes more attractive, potentially raising the earnings of union members by 20 to 40 percent as they compete with minimum wage workers for jobs. In the long run, non-union, low-skilled workers' earnings actually fall due to reduced working hours and fewer job opportunities. This explains why many minimum wage workers rarely have jobs allowing 40 hours per week and why companies abandon low-income neighborhoods.
What kind of long-term help is that?
Finally, government cannot create one of the most critical ingredients in long term poverty amelioration: responsible fathers. Responsible fathering is a moral issue. On what ground do politicians and government bureaucrats speak about responsible fathering? It’s not mentioned in the Constitution. Are we left to glean principles from politicians’ own behavior? In recent decades, we’ve had presidents cheat on their wives by dating actresses or commit sexual acts with interns. Additionally, many Congressmen engage in adulterous sex with staffers or hire prostitutes from D.C. streets and high-end “escort” services.
Responsible fatherhood is accomplished not by cash assistance but by a morally formed sense of integrity, responsibility, and character. No government program can develop a man’s identity nor cultivate a disposition of life-long committed love, affection, and duty to his wife and kids. However, government can support fatherhood by ensuring conditions for the free operation of the intermediate institutions—families, churches, fraternal societies—that have historically and successfully formed men.
Government, on the other hand, can interfere with marriage and provide disincentives for fatherly responsibility, as demonstrated during America’s experiment with pre-1996 welfare programs that subsidized, and therefore encouraged, fatherlessness.
While poverty tours can helpfully raise awareness of the problem, remixing failed ideologies does nothing more than guarantee more “poverty tours” among the same disadvantaged populations in the future.
An edited version of this commentary appeared in the July 24, 2007, Detroit News.
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