One of the great economic myths of liberalism is that raising the minimum wage raises living standards. No one thinks about the fact that the true effect of raising the minimum wage is to cut more unskilled workers out of the job market.
It works this way: If I’m a business owner, I might be willing to hire 4 unskilled workers at $4.00 per hour until they learn the job and prove themselves capable and dependable and worth a raise. But if you force me to pay a minimum wage of $7.25 per hour, I might hire only two new employees (or I might hire no new employees in hopes that my present workers can take up the slack). So, instead of having 4 teenagers earning $4.00 per hour, now only two have a job and two have nothing (unemployment increases).
But what is especially unspoken (and consequently largely unknown) is that the evil effects of raising the minimum wage hit young black teens the hardest. In 2007 (when the latest hikes in the minimum wage began to be put in place), the unemployment rate among black teens was 29%. Today (after the minimum wage hikes) that rate has risen to almost 42%. Thanks to the “wisdom” of Congress the number of unemployed black teens is almost 13% higher than it was 4 years ago (according to a report in today’s Wall Street Journal)
And still we have not learned our lesson. According to the Journal article, “The Center for American Progress, often called the think tank for the Obama White House, recently recommended another increase [in the minimum wage] to $8.25 an hour.”
The CAP says that raising the minimum wage would result in “50,000 new jobs”! Oh, right. That’s always what happens with a raise in the minimum wage. Sure.
The most likely result of raising the minimum wage by another dollar would be to push the black teen unemployment rate to 50%. If I didn’t know better, I’d be wondering how the Ku Klux Klan took over the Center for American Progress.
But then again, maybe I just don’t understand how the Obama administration defines “progress.”
[HT to Anthony Bradley for pointing out the WSJ article]
Steve,
What I have never understood about the minimum wage issue is why the liberals are so cheap: IF the government has the power to set wages why not make the minimum $65 per hour and let us all live comfortable lives!
John
Ain’t that the truth! If $8.25 per hour gets us 50,000 new jobs, why stop there? Insane.
Where I live, even minimum wage is a decrease from what the government gives out. Folks find that if they work at Walmart and pay taxes, they will actually have less money per month than if they stay home and play video games all day.
The 18-30 year olds who play video games all day spend on average $250 per month on cigarettes. When they have a baby, the money gets even better. Sometimes, however, filling out the paperwork itself is a full time job. But even that can be done by a social worker so that all one has to do is mark his or her “X” on the paper.
I have interviewed more than 2,500 individuals in less than a decade. When I dare to venture the question of “What do you do to provide for the baby?” the number one answer comes with a look of shock upon the face:
“TANIF!”
Then it is back to the video game which I rudely interrupted.
Peter
Peter, that’s the other side of this whole mess. So here are the first steps toward solving the problem: Do away with welfare, the minimum wage, and the IRS. That would be a nice start — then we could start thinking about some serious reform.