A deal was reached yesterday at Albany that would raise minimum wages businesses must pay workers in the state to $7.15 an hour from $5.15 by 2007.

That’s bad news for low-income, low-skilled workers. One effect of raising the minimum wage is that it attracts higherskilled workers, particularly middle-class teenagers, to traditionally low-skilled jobs, displacing the low-skilled workers the law aims to help. Numerous studies have documented this effect. One, from the University of Wisconsin, found that women on welfare are 20% less likely to work in states in which the minimum wage has been raised beyond the federal level.

“The sad fact is the most vulnerable workers are the ones who are going to lose their jobs or not be hired at all,” said the chairman of the department of policy analysis and management at Cornell University, Richard Burkhauser, who just published a study on the impact of raising the minimum wage on New Yorkers.

That study looked at people who earn the minimum wage or who earn between $5.15 and $7.09 an hour and would thus be affected by the proposed increase. Of these workers, only 13.5% live in households below the poverty line, the study found, relying on Census data. That’s because most minimum-wage earners — 60%, according to the Cornell study — are not the primary breadwinners in their households.

Much of the benefit of any minimum-wage hike goes to teenagers, who make up more than a quarter of all minimum-wage earners nationally. According to the Cornell study, the proposal on the table in New York would wind up costing employers $880 million a year, making this a gigantic redistribution of wealth from business-owners to a great many young mallrats. A more targeted way of helping working families is the Earned Income Tax Credit.

Even better is for minimum-wage earners to rise out of poverty the old-fashioned way: by working their way up the ranks. That’s not an unrealistically rosy scenario, as many liberals would have us believe, but in fact what happens when the government stays out of this business. After all, the vast majority of us, 98%, make more than $5.15 an hour, and that’s not because the government dictates people’s salaries to reluctant bosses; it’s because people have skills that command higher wages.

Even without state interference, workers at the lowest rungs of the pay scale are likely to see bigger raises, in percentage terms, than the rest of us. Research released last month from Miami University of Ohio and Florida State University found that 65% of workers who started at minimum wage were earning more than the minimum after a year of employment. These workers experience higher rates of wage growth than higher-paid workers, at 14% in their first year.

Despite all the evidence that raising the minimum wage is an ineffectual way to reduce poverty, the minimum-wage proposal has gained support from some surprising corners, including the Republican leader of the state Senate, Joseph Bruno, and the Partnership for New York City, a business group. New York’s Republican governor, George Pataki, seems unlikely to veto the bill.

The politicians in Albany, Republicans and Democrats alike, have managed to agree on a way to disrupt the budgets of small businesses in the state. They haven’t, however, managed to agree on a state budget, which was due April 1. They’ve got their priorities backward.