Minimum Wage Laws Increase Homelessness, New Study Finds

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Utilizing data from the Department of Housing and Urban Development and other sources, University of California economist Seth J. Hill examined 100 cities from 2006-2019 to determine the relationship between wage floors and homelessness. The findings are bleak.

Source: Minimum Wage Laws Increase Homelessness, New Study Finds - Foundation for Economic Education

This point of this article can be more or less summed up by the quote it contains from economist Murray Rothbard:

Remember that the minimum wage law provides no jobs, it only outlaws them; and outlawed jobs are the inevitable result.

How does the minimum wage outlaw jobs? Simple, it outlaws jobs that pay less than minimum wage. The problem is that doesn't necessarily mean that all jobs will now pay the new minimum wage, whatever it happens to be. Instead, some jobs will simply go away as employers decide they can make do with fewer employees or simply cannot afford as many. In extreme cases, employers may go out of business (putting more workers out of a job) or be forced to raise prices (negating some of the benefits of raising the minimum wage in the first place.)

These aren't just common sense statements, there is data to back it up too. According to a recent study out of the University of California, San Francisco, the primary driver of homelessness is loss of income. It's not low wages, but loss of income altogether that is the primary driver of homelessness. Data from the Department of Housing and Urban Development suggests that a 10% increase in the minimum wage results in a 3-4% increase in the rate of homelessness. No doubt raising the minimum wage helps some people, but how many does it hurt by comparison?

Minimum wage increases like so many other government policies have advantages and disadvantages. Too often we are only told about the obvious benefits. However, to make well informed decisions, we must also be aware of the disadvantages. Otherwise it just amounts to politicians buying votes.