I’ve never understood the idea of a minimum wage law. Why should the federal government be telling private businesses how much to pay employees? That’s a function of the market. When the government intervenes, the market reacts. Always.
Today the rate of teen unemployment (age 16-19) stands at a staggering 24% in this country. In May of 2000 teen unemployment was 13%.
Michael Saltsman of the Employment Policies Institute explains:
It’s one of the fundamental laws of economics: When you increase the price of something, you will ultimately decrease demand for that product. With the first anniversary of the recent 40 percent hike in the minimum wage upon us, we see that maxim in effect once again. A new study by labor economists William Even (Miami University) and David Macpherson (Trinity University) shows that the federal wage hikes implemented between July 2007 and July 2009 were responsible for 114,000 fewer employed teens. Businesses “bought” less labor.
In states that felt the impact of the full 40 percent wage increase, teen employment fell by 6.9 percent. Indiana was emblematic of this nationwide trend. The $2.10 wage increase was responsible for a 7.9 percent decline in the number of employed 16- to 19-year-old Hoosiers. The decline is even steeper for those teens with less than 12 years of education, who suffered an 11.5 percent drop in employment.”
Liberals argue endlessly that the minimum wage should be a living wage; a wage that will support a modest lifestyle for the worker. Saying it doesn’t make it so. A job is more important than setting a pay rate for entry level employees that kills those entry level jobs. People need a chance to learn how to work rather than sit around collecting a government check for not working.
The current federal minimum wage is $7.25 per hr. Some states and cities impose their own higher minimum wage laws. They can set it wherever they want to, it will always be a poverty wage because the market will adjust from the floor. At best, a few people get a temporary benefit when the rate increases. Others lose their job or can’t get a job. Everyone is punished by the price increases passed along to cover at least part of the wage increase. Have you checked the price of a Big Mac lately?
Unintended consequences are the result of government intervention in the free market. Higher prices and fewer jobs are not the only outcome. Idle hands really are the devil’s workshop. Kids who are working don’t have time to participate in violent flash mobs or terrorize the local beaches.
The minimum wage destroys entry level jobs. The 40% jump was a killer for many small businesses, caught in weak market conditions, unable to raise prices. Democrats demagogue this issue without remorse for the jobs lost. In fact, some are lobbying to INCREASE the minimum wage. Yeah, that’ll work to boost the economy. If it really did, we could all agree to make the minimum wage $30 per hour and live the happy, happy, joy-joy life.
Disclosure: I have been operating a small business for the last 30 years. I have always paid substantially above the minimum wage . . . not because I wanted to, but because it was required to attract and retain employees.