Study: Minimum wage hikes raise crime
Research has documented time and time again the unintended negative consequences of the minimum wage. Making it costly to hire some people at certain wages leads to job losses, automation, and higher prices — as companies pass higher labor costs on to consumers. And while sometimes employers might not necessarily cut jobs in response to a higher minimum wage, they might reduce work hours or other benefits they offer workers.
A new study goes beyond these job effects and estimates that minimum wage hikes also do have an impact on crime. By killing jobs, the minimum wage reduces the opportunity cost of crime, leading to more crime.
Criminals, much like anyone else, face opportunity costs for every decision they make. One of the basic decisions that criminals have to make is to either commit a crime or work in order to achieve their ends.
When jobs are widely available and also pay well, there is a high opportunity cost to not working. However, when jobs are not widely available or pay is low, there is a low opportunity cost to not working. Thereby criminals are more likely to conduct other activities apart from working, such as crime.
In fact, the authors of the study estimate that
a 1 percent increase in the minimum wage is associated with a 0.2 to 0.3 percent increase in property crime arrests among 16-to-24-year-olds, an effect driven by an increase in larceny-related arrests.
Applying these estimates to the proposal that was passed in 2021 by the U.S. House of Representatives to raise the federal minimum wage to $15, the researchers estimate that such a policy would lead to 309,000 additional thefts of personal property — larceny.
This is not to say, however, that we can eradicate all crime by offering people jobs. It just means that loss of job opportunities can have some far-reaching impact on crime at the margin, especially for some select crimes.
This goes to show once again, that good intention do not equal good results.