Economic Snapshot | Wages, Incomes, and Wealth

Fighting crime with better paying jobs

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Snapshot for August 9, 2000

Fighting crime with better paying jobs
Rising wages for low-skill and entry-level workers helps to deter crime. According to economic theory, potential criminals will respond to changes in economic incentives. Simply put, if legitimate work pays better than crime, then a person will choose work over crime.

Since 1996, the crime rate has fallen by 5.5% per year-almost twice as fast as the 2.6% annual rate of decline from 1992 to 1995. Wages for young workers whose labor market characteristics resemble those of potential offenders and ex-offenders have also improved.

The chart below presents the real wage trends of low-wage and young entry-level men from 1989 to 1998. With the passing of the minimum wage increase in 1996 and the further tightening of the labor market, real wages have increased by 6% over this period.

Real wage trends among low-wage men, 1989-98

The chart shows that after a long period of decline in real wages for young and less-skilled male workers, real hourly wages are returning to the levels paid in the early 1990s. In 1998, average hourly wages were $8.86 for high school graduates and $7.61 for those with less than a high school education.

These hourly wages are still at or below estimates of hourly pay from crime. Most estimates place average hourly earnings somewhere between $7 and $12, with earnings as high as $30 per criminal hour, according to one study of drug dealers in Washington, D.C. This suggests that further increases in wages from legitimate work, particularly for those at the bottom of the wage ladder, could have an even greater effect on crime reduction.

Source: Bernstein, Jared, and Ellen Houston. 2000. Crime and Work.

This week’s Snapshot by EPI economist Ellen Houston.

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