Report: Minimum wage hikes could lead to increased property crimes and $2.4 billion in associated costs

By Bethany Blankley | Watchdog.org

Minimum wage hikes are unlikely to reduce crime rates and instead could increase them, according to a new study produced by the National Bureau of Economic Research (NBER).

The study’s release coincides with the House Education and Labor Committee’s advancement of the Raise the Wage Act of 2019, which would increase the federal minimum wage to $15 an hour over several years.

It also refutes the argument made in 2016 by the former president’s Council of Economic Advisors (CEA) who claimed raising the minimum wage to $12 per hour could prevent nearly 500,000 crimes annually.

Seattle City Council/Public domain

Despite the good intentions of those who favor raising the minimum wage, multiple studies have shown that the the negative impact may far exceed any hoped for benefits.

The authors of the study, Zachary Fone of the University of New Hampshire, Joseph Sabia of San Diego State University, and Resul Cesur of the University of Connecticut, disagree.

“While we respect the team of economists working at the CEA at that time, the report’s conclusion unfortunately rested on the assumption that minimum wage increases would only generate wage gains without any substantial offsetting employment or human capital effects,” San Diego State University professor Joseph Sabia explains. “Our study shows that these effects cannot be ignored. The adverse employment effects generated by a $15 minimum wage are likely to increase property crime among some young adults.”

Sabia notes that they found evidence “that some affected younger workers turn to property crime, either due to excessive idleness or to replace their lost income. Higher minimum wages may, therefore, make some neighborhoods less safe.”

Raising the minimum wage, the authors found, could lead to roughly 410,000 additional property crimes committed by mostly 16 to 24-year olds, and cost taxpayers $2.4 billion in associated crime costs.

“Raising the minimum wage doesn’t just increase joblessness – it increases property crime as well,” Samantha Summers, EPI’s communication director, said. “Pushing a wage hike of this magnitude is guaranteed to bring negative consequences that hurt those who the policy is intended to help.”

The study examined 20 years worth of data from the FBI’s Uniform Crime Reports, the National Incident-Based Reporting System, and the National Longitudinal Survey of Youth 1997. The economists focused on “younger, less experienced teens and young adults who make up a disproportionate share of the minimum wage workforce, and who are more likely to face the brunt of any increase.”

They examined property crimes, violent crimes and drug crimes, and used a regression method and other econometric strategies to determine the effect of the minimum wage. They sought to “be sure we were not confusing correlation with causation,” Sabia says.

Their analysis found that property crimes were more likely to be larceny than burglary, motor vehicle theft or arson. Increased crime rates were identified in counties with populations over 100,000.

By comparing the crime responsiveness to minimum wage increases, the authors found that a 10 percent increase in the minimum wage between 1998 and 2016 led to nearly 80,000 additional property crimes committed by 16-to-24 year olds. Using the same metrics, they calculated that if the $15 per hour minimum wage was implemented, another 410,000 property crimes would be committed as a result.

The report, Ryan Bourne at the Cato Institute, argues, “presents robust evidence that minimum wage hikes do not reduce crime. In fact, they increase property crime arrests among 16-24 year olds – the group for whom the minimum wage is most likely to bite.”

The study was supported in part by the Employment Policies Institute (EPI), which also published a book and policy brief to explain the socio-economic consequences of a $15 minimum wage mandate. EPI estimates the mandate could result in the loss of two million jobs.

In February 2019, EPI surveyed 197 economists in the U.S.; 74 percent said they oppose the federal minimum wage mandate; 88 percent said an acceptable federal minimum wage should be less than $15 an hour; 84 percent said a $15 minimum wage would have negative effects on youth employment levels; 77 percent said it would have a negative effect on the number of available jobs; 56 percent said it would negatively impact adult employment levels.

Among those surveyed, 64 percent said a better alternative to increasing the minimum wage would be to expand the Earned Income Tax Credit (EITC). The EITC has proven to increase income and reduce poverty for many without the unintended negative consequences a higher minimum wage presents, they argue.

Sabia adds, “expansions in the generosity and eligibility for the EITC would be far a more effective anti-poverty policy than raising the minimum wage.”

Image courtesy of Seattle City Council/Public domain

2 thoughts on “Report: Minimum wage hikes could lead to increased property crimes and $2.4 billion in associated costs

  1. So the leftarded faction must have know about the eventual Property crime increase from the
    raised min wage. That’s why they are trying to decriminalize property crime and theft under
    a certain ammount in most big cities. Leftarded controlled cities I should add.
    They have to give the young worker they put out of a job something to do while waiting for their
    welfare check.

  2. Republicans need to address the cost of living in Vermont, just saying all the negative things about artificial wage control makes us look like we don’t care about people’s well being. Given the fact that we don’t fight hard and publically for those trying to get on the first rung of the ladder makes it sooooo easy for DNC operatives to make us look cold hearted and cheap, of which we are neither.

    If we don’t change our strategy not only will they steal our lunch, they’re looking to steal our constitution. We have to get smart quick. I personally can’t stand the self righteous attitude of those who claim to be for the down trodden while, keeping people, in poverty. The current Vermont plan run by those DNC lemmings is the biggest scam running. They stole,the Republicans lunch, ate it in front of them, but they’ve taken the dessert, the chance to own your own home, start you own business from the poor and bought themselves a great career in Vermont government “helping the poor”. The more poor they help the better their retirement gets, it’s not a coincidence

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