Tuesday, March 18, 2014

Who Would Benefit from Raising the Minimum Wage?

Skeptics about raising the minimum wage complain that it is a bogus issue because most people paid that badly are teenagers who live at home. The president disagrees. But wait, you're thinking, isn't this a factual question that statisticians can answer?

It is, and Nate Silver's new FiveThirtyEight website takes up the challenge. About 25 million Americans earn less per hour than the proposed new rate of $10.10; how many of them are actually supporting themselves?
To estimate that number, we first need to define what we mean by “supporting themselves.” We’ll start by eliminating both teenagers and retirees from our count, limiting ourselves to people between the ages of 20 and 64. A substantial — and increasing — number of young adults are living with their parents, so we’ll also exclude anyone under 30 whose parent is in the same household. A trickier question is how to handle multiple-earner households; we’ll include anyone who is unmarried, whose spouse is absent or doesn’t work, or whose spouse is also a low-wage worker. Based on that definition, there were 13 million Americans, out of the 25 million low-wage earners, who were trying to support themselves on less than $10.10 per hour in 2013. Some 4.5 million of them were also raising children.
And there you have it; the president is right. Aren't facts great?

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