For decades, economists and sociologists have debated the pros and cons of minimum wage increases. Generally, these debates have centered upon the economic effects of minimum wage hikes. However, according to new research, there may also be a correlation with minimum wage increases and a rise in crime.
A study titled “The Unintended Effects of Minimum Wage Increases on Crime” from the Journal of Public Economics shows that minimum wage hike-induced job losses may account for increases in larceny arrests and overall criminal activity.
Using data from the FBI’s Uniform Crime Reports, the authors found that a 1 percent increase in the minimum wage is associated with a 0.2 percent increase in property crime arrests among 16- to 24-year-olds.
Furthermore, supplemental analyses of the workers who are affected by minimum wage hikes show that increases in the minimum wage may lead to higher rates of property crime based on data from the National Longitudinal Survey of Youth in 1997.
The study cites Gary Becker’s “Theory of Rational Crime” in The Economics of Crime and Punishment, which posits that criminal behavior is responsive to the current conditions of the labor market and human capital acquisition.
The authors cite studies that have charted changes in local employment conditions for populations on the margin of criminal activity and find that unemployment rates and crime are directly correlated.
To corroborate the point even further, recidivism also decreases when there are ample opportunities for low-skilled workers in the construction and manufacturing sectors in the communities in which ex-offenders are released.
Overall, the study concludes that a $15 federal minimum wage could generate median criminal externality costs of approximately $766 million.
All of these datapoints clearly indicate that robust labor markets provide more opportunities for low-skilled individuals, which almost assuredly results in less criminal behavior. Despite this, Democrat lawmakers continue to push for minimum wage hikes.
For instance, last September, California Gov. Gavin Newsom signed into law Assembly Bill 1228, which raised the hourly minimum wage for fast food workers from $16 per hour to $20 per hour.
Unsurprisingly, this steep hike in the minimum wage for fast food workers has already had substantial downstream effects. According to the California Business and Industrial Alliance (CABIA), there have been around 10,000 fast food job layoffs since AB 1228 was signed into law.
According to the U.S. Bureau of Labor Statistics, California maintains a 5.2 percent unemployment rate. Meanwhile, California’s crime rate is among the nation’s worst. In 2022, California tallied 495 crimes per 100,000 residents and 2,314 property crimes per 100,000 residents.
In fact, California is one of the worst examples regarding the real-world implications of Democrat’s radical economic and social policies.
At the national level, a recent study by the Congressional Budget Office examined how increasing the federal minimum wage by incremental degrees to $15 per hour by 2025 would adversely affect employment and household incomes. While the study does find that a minimum wage increase boosts some workers’ wages, it also leads to job loss for many others, with small businesses often bearing the brunt of economic pain.
The impact on small businesses is substantial, forcing them to reallocate scarce resources from profit-generating enterprises towards higher labor costs. Often, this results in lower hiring levels, work-hour reductions, layoffs, and increased prices for consumers.
Making matters worse, increased layoffs likely lead to increases in criminal activity as those who are no longer in the workforce turn to crime. All too often, small businesses then have to deal with the ongoing threat of theft and various property crimes.
These aforementioned points are all reasons that minimum wage hikes should be avoided. Despite these and many other warnings, Democrat-dominated cities and states continue to push for “quick fix” minimum wage hikes.
For instance, Democrat presidential nominee Kamala Harris is on board with this popular trend within her party, recently announcing that if elected president, she would raise the federal minimum wage.
If one thing is certain, artificially raising the minimum wage above what the laws of supply and demand dictate has consequences well beyond the economic sphere.
Minimum wage hikes are not the solution to helping Americans rise out of poverty. Moreover, as the research suggests, they could also be a contributor to the rise in shoplifting and other crimes that seems to be getting worse as the days go by.
