June 20, 2024
June 20, 2024

More On The Minimum Wage

So what causes homelessness in America?

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        I have never seen a stronger argument against the minimum wage laws than the one published in the May 8, 2024 edition of the Orange County Register written by Faryal Ahsan and Austin Hamilton. These are two students in an Econometrics class taught by our fellow 2 Paragraphs member, Dr. Jim Doti of Chapman University. These students cited statistics to show that California has the highest numbers of homeless in the nation, both by sheer numbers as well as per capita.  New York state is second, but with less than half of the number of homeless. 

        So what causes homelessness here and elsewhere?  The young authors cited further statistics to show that the highest three causes are, in this order, A state’s minimum wage rate, drug use by minors, and the state’s unemployment rate.  Here are their direct results:

        “The resulting double logarithmic form of our equation produced elasticities that showed that a one percent increase in a state’s unemployment rate increased homelessness per capita by 0.41 percent. A one percent increase in per capita drug use by minors increased homelessness by 0.76 percent. The highest elasticity was for the minimum wage, where a one percent increase in a state’s minimum wage led to a 0.90 increase in homelessness.”  (Italics mine.)

        Of course, you are aware that California recently increased its minimum wages for many workers up to $20 per hour – which is well beyond one percent, which has resulted and will continue to result in many mostly younger employees losing their jobs.  So more homelessness!  And it’s not just California.  The students found that the homeless rates were 9.4 percent for the states with the lowest minimum wage of $7.25, with the next ten lowest states at 10.1 percent and the next ten lowest at 16.8 percent.  But for the ten states with the highest minimum wage rates (certainly including California) the homelessness rate was 25.9 percent!  Don’t our elected officials care?  We should all help to tell them about these realities!

Proverb for the Week (from Japan):  “Fall Seven Times: Stand Up Eight!”

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