FYI, Minimum Wage Hikes and Universal Preschool are Proven Failures

February 20, 2013 | Posted by Enrique

President Barack Obama’s State of the Union address last week was the lowest rated since Bill Clinton’s swansong in 2000. If you feel it’s hard to get excited about the rubbish this guy continues to peddle, you’re not alone. But there’s always a chance Obama’s misaligned priorities might have an undesirable impact on our daily lives, so we might as well have a look at what he’s planning.

Among the tedious list of bromides and half-truths, two objectives seem to stand out in Obama’s speech – raising the minimum wage to $9.00 per hour, and establishing a universal preschool entitlement. I wish I could say it’s not often the POTUS advocates policies that are unsupported by available evidence. Since I can’t say that, let’s review the evidence that shows minimum wage hikes and government preschool are bad ideas.

The story so far…

Some time around 2004, the phrase “reality-based community” became a cute way for lefties to contrast themselves with the GOP values voters that reelected George W. Bush. Self-identifying as “reality-based” is a handy way of saying you don’t have time for a bunch of jokers who think the Earth is 6,000 years old, and that Jesus Christ’s most important lesson was that homosexuals shouldn’t get married.

And while it’s fun to have a laugh at Republican moralist do-gooders, being reality-based is more subjective that it might first appear. There are several progressive policies that have been discredited by serious research, and yet lefties cling to them as bitterly as conservatives cling to guns and religion. Speaking of the former, last month U.S. Department of Justice researchers found that an assault weapon ban is “unlikely to have an effect on gun violence.” Does anyone think these findings will stop Obama’s push for new gun control measures?

In his otherwise forgettable 2013 State of the Union address, Obama made two proposals – a minimum wage hike and a universal preschool entitlement – that we know will not work as advertised. Maybe someone forget to tell him? There’s plenty of information available to refute these policies if you’re willing to look for it. Could it be that Obama is even less curious than his justly loathed predecessor?

Below is a review of what Obama said on these two topics, and brief explanations of why he’s full of crap.

“We know our economy is stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong…Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour.”

Well, you can’t deny math. If you only work 50 weeks, a $7.25 per hour wage does indeed add up to $14,500 a year. Obama nailed that one.

As for the family with two kids living on $14,500 a year, that’s a preposterous representation of who makes minimum wage. About half of people making minimum wage are teenagers, most are not living in poverty, and the majority are not the sole earners in their household. But you don’t have to take my word for it:

According to the Bureau of Labor Statistics, 1.8 million paid-hourly employees were paid the federal minimum wage of $7.25 in 2010. These 1.8 million employees can be broken down into two broad groups:

Roughly half (49.0 percent) are teenagers or young adults aged 24 or under. A large majority (62.2 percent) of this group live in families with incomes two or more times the official poverty level. Looking just at the families of teenaged minimum wage workers, the average income is almost $70,600, and only 16.8 percent are below the poverty line. Note that the federal minimum wage applies to workers of all ages.

The other half (51.0 percent) are aged 25 and up. More of these workers live in poor families (29.2 percent) or near the poverty level (46.2 percent had family incomes less than 1.5 times the poverty level). However, even within this half of all minimum wage employees, 24.8 percent voluntarily work part-time, and just 34.3 percent are full-time full-year employees.

Furthermore, less than 5% of minimum wage earners are adults working fulltime trying to raise a family – and that’s the example Obama gave for your typical minimum wage case. I guess “a family with two teenage kids who both earn minimum wage at their part-time jobs and don’t live below the poverty line” doesn’t have the same ring to it.

But even if everyone who earned minimum wage were single mothers trying to raise their brood, increasing it to $9.00 wouldn’t make their lives easier. In fact, it would very likely result in diminished job opportunities. When you add extra labor costs to an employer without adding any additional productivity, they are either going to cut jobs, or not create entry-level jobs in the first place. Raising the minimum wage effectively prices low-skilled workers out of the labor market.

As Milton Friedman succinctly put it, “The real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by higher minimums are the most poverty stricken.”

If that’s not enough to get lefties to rethink the minimum wage, they may want to consider that the minimum wage laws have historically been used to prevent black workers from competing with whites in open labor markets – both in the U.S. and in other countries. The minimum wage is at least as racist as anything else white liberals get pissy about these days.

“Study after study shows that the sooner a child begins learning, the better he or she does down the road. But today, fewer than 3 in 10 four year-olds are enrolled in a high-quality preschool program. Most middle-class parents can’t afford a few hundred bucks a week for a private preschool. And for poor kids who need help the most, this lack of access to preschool education can shadow them for the rest of their lives. So tonight, I propose working with states to make high-quality preschool available to every single child in America.

I’m not sure what studies Obama is referring to, but this 2010 report on the federal government’s existing preschool program Head Start found it to be a failure. Conducted by the U.S. Department of Health and Human Services, the study concluded that “the benefits of access to Head Start at age four are largely absent by 1st grade for the program population as a whole. For 3-year-olds, there are few sustained benefits, although access to the program may lead to improved parent-child relationships through 1st grade, a potentially important finding for children’s longer term development.”

A follow-up study was conduct just last year, which reached similar conclusions: “In summary, there were initial positive impacts from having access to Head Start, but by the end of 3rd grade there were very few impacts found for either cohort in any of the four domains of cognitive, social-emotional, health and parenting practices. The few impacts that were found did not show a clear pattern of favorable or unfavorable impacts for children.”

Maybe the reason fewer than 3 in 10 four year-olds are in “high-quality” preschool is that most parents don’t think preschool is high quality. Available polling data does not indicate universal demand for preschool, so Obama’s proposal is attempting to fulfill a need that does not exist. For those who do want preschool, there are plenty of options in the private sector – where parents (not the government) make judgments about what constitutes high quality.

As it stands, we’ve got three more State of the Union addresses by Obama to look forward to in the coming years. Once his lame duck status settles in and no one has to listen to him anymore, hopefully his legislative objectives will be more reality-based.


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