Jobs growth, not raising the minimum wage, is best way to fight crime
The White House encourages raising the minimum wage as a way to reduce crime, but this proposal ignores what happens when people are priced out of legal work.
The White House believes raising the minimum wage to $12 would reduce crime – but there’s evidence that’s not the case.
The President’s Council of Economic Advisors issued a report in April looking at criminal-justice reform from an economic perspective. There’s much to admire in the paper – it gives an excellent overview of the financial and social tolls of excessive incarceration and how current sentencing policies and barriers to re-entry fail a cost-benefit test.
But the authors also suggest that raising the minimum wage is a good way to reduce crime. The White House argues, citing studies that show higher-wage jobs reduce the incentive for crime by providing “viable and sustainable employment,” that a $12 minimum wage could “result in a 3 to 5 percent crime decrease” and a “societal benefit” of up to $17 billion.
True, finding work deters people from crime. But hiking the minimum wage will almost certainly guarantee work will be harder to find, especially for young workers and those new to the workforce.
As the paper notes, the assumption of a crime decrease “[assumes]… a minimum wage increase would have no employment impacts.” But while a minimum-wage increase may help workers fortunate enough to keep their jobs, it harms those who would be let go or would otherwise not be hired if their skills weren’t developed enough, in the eyes of employers, to justify a $12 wage. There are already too many job seekers who aren’t being hired at the current minimum wage. Research by the Manhattan Institute suggests that implementing a $12 minimum wage by 2020 could eliminate as many as 3.8 million low-wage jobs.
Unfortunately, adolescents and young adults between the ages of 15 and 24 are the most likely to commit a crime – exactly the population raising the minimum wage would most likely hurt. If they’re priced out of the legitimate labor market, it’s more likely that they will look to illegal options to support themselves.
Ex-offenders who seek jobs already have a hard time finding employment, which makes it much likelier they will return to crime. Currently, 48 percent of Illinois ex-offenders recidivate and return to prison within three years after they’re released. Ex-offenders have worse job prospects than the general population both because of low levels of education and the stigma of a criminal record. Less than 20 percent of Illinois inmates have graduated from high school, according to the Illinois Department of Corrections. Survey data suggest as many as 60 to 75 percent of former offenders are unemployed a year after their release. A minimum-wage increase would likely exacerbate the difficulties for workers with a criminal record looking for employment after prison.
What’s a better path toward fighting crime? To start, the right policies would make it easier, not harder, to find work.
One easy way to start would be to remove occupational licensing barriers, which limit entry into professional fields. Today, nearly 2 in 5 people nationally require government permission to work – up from just 1 in 20 60 years ago.
But it’s often the case that occupational licensing restrictions are placed on jobs without any inherent risk to public safety. Not only are licenses required to work in high-risk fields, such as medicine, but they’re also mandated for jobs such as barber, cosmetologist, interior designer and hundreds of other occupations in Illinois without the same relevance to public safety. As a result, licensing requirements arbitrarily raise barriers to entry and end up preventing people from finding employment and unfairly protect an industry’s established players from market competition. Young adults, in particular, are often harmed by these rules, especially when they don’t have college degrees, and thus have fewer opportunities for economic advancement.
For these reasons, commentators across the political spectrum have described occupational licensing as nothing short of a “racket.”
Jobs are key to preventing crime. And to be sure, having a higher-paying job, on average, reduces the likelihood someone will commit a crime. But having the chance to get a foot in the door with low-wage work and build skills is much better than having no job at all. Policymakers who favor raising the minimum wage should reconsider – it may hurt more than it helps.