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]