A higher minimum wage could lead to fewer rich kids
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Critics of a $15 per hour minimum wage—as advocated by Bernie Sanders and the Democratic Party, and soon to be implemented in California and New York—point to the standard’s unintended consequences: fewer jobs, higher prices, and more workers replaced by robots.
It could also have another unexpected effect: fewer rich kids.
That’s one of the conclusions of a recent paper exploring the effects of income inequality on US family size. Wealthy families in the US have more children than they did 20 years ago, a trend that’s most pronounced among the those with the highest incomes.
In a paper for the UK-based Centre for Economic Policy Research, a team of economics researchers ascribed the change in demographics to income inequality. Since poor people’s wages stagnated while rich people’s incomes grew at a healthy pace, it’s become that much easier for wealthy families to hire poorer help to assist with domestic chores and childcare.
Noting that the salaries of domestic workers (including those who care for children) tend to hew close to the minimum wage, the researchers decided to examine a hypothetical. If wealthy people are having more children because it’s cheap to hire people to help care for them, would a $15 per hour minimum wage affect their family planning decisions?
According to their models, it would—in a big way. Raising the minimum wage to Bernie Sanders-approved levels would likely slow down the trend of rich families having more children. US fertility would revert closer to what traditional economic models suggest, where women have fewer children as their income and education levels rise.
“We’re saying that if you raise the minimum wage that’s bad for rich people,” said David Weiss, an economics lecturer at Tel Aviv University and co-author of the study. “Rich mothers will have to make a choice between career and motherhood.”
In this model, a higher minimum wage would decrease inequality, by forcing more people at the upper end of the income spectrum to make the hard choices about childcare and family size that lower-income families already know well.
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