Homelessness is out-of-control in many of America’s biggest cities. Issues like drug addiction and mental illness are most often blamed for this problem, but new research suggests there’s another factor that’s also played a role: progressive economic policy.
A study by political scientist Seth J. Hill analyzed the relationship between changes in a locality’s minimum wage laws and its homeless population. Hill found a clear negative pattern that suggests increasing legal minimum wages may fuel homelessness.
“Municipalities that increased minimum wages by more than $2.50 per hour from 2013 to 2018 saw an average increase of 23 percent in homeless counts in the years 2014 to 2019 relative to municipalities with no change,” the study reports. “When cities raise their minimum wage by 10%, relative homeless counts increase by three to four percent.”
Why might this be?
Well, to understand how hiking the minimum wage could fuel homelessness, we have to consider all the effects that this change can have—not just the touted benefits.
Some workers who keep their jobs will see their pay go up. Other workers will keep their jobs but ultimately see their pay go down because their overall hours will be cut. Other workers will lose their jobs because it’s no longer profitable to employ them. And other would-be workers will be priced out of the job market entirely because they can’t produce more in value than the required minimum wage. The workers on the margins who face the most harm from an increased minimum wage will tend to be those already struggling in life with other problems—the same workers at risk of homelessness.
“If a higher minimum wage causes economic harm more often for individuals with characteristics that cause hardship–low skills, lower education, mental or physical disabilities, criminal records, drug addiction–minimum wages could push some at the bottom of the economic ladder into housing, health, or physical insecurity,” Hill concludes.
But proponents of minimum wage hikes never think about these adverse consequences. They just invoke emotional appeals about uplifting the poor and what kind of wages people “deserve.”
It shouldn’t be a surprise that such emotion-driven policymaking often backfires and hurts the very same people it’s supposed to help.