Minimum Wage, Maximum Folly

There's an awfully transparent sleight of hand in this editorial about the unintended consequences of raising the minimum wage.

Nationally, the percentage of unemployed teens recently increased to 3 1/2 times the overall unemployment rate, the highest it's been in nine months. Is it just a coincidence that over that same nine-month period there were 16 state-level minimum wage hikes, including a 6 percent boost in New York?

Interesting yardstick, nine months. Let's see, nine months ago, that was just after last summer. Meaning, just after teen employment rates dropped, as they do every year when the season's over and teens go back to school.

That noted, I can't quibble with the gist of the piece. The road to hell is lined with do-gooders who wouldn't know about the immutable law of the market if it slapped them upside their thick heads.

Economic research has shown time and again that increasing the minimum wage destroys jobs for low-skilled workers while doing little to address poverty. And testimony from employers across the country confirms that it wreaks havoc on the summer job market. The classic summer jobs — cashier, restaurant waiter, grocery clerk — can help an employer with increased service or fill in for full-time employees taking vacations or sick leave. When the minimum wage gets boosted, however, employers hold off on hiring teens to fill those slots. Most of the work still gets done. But customers may get stuck standing in longer lines. And teens lose out because they're stuck at home watching reruns of "The Price Is Right."

What's more, low-skilled positions have high turnover rates, so employers spend unusually large amounts of time and money training new people to fill them. The higher minimum wage makes that training more expensive. For many employers, it's no longer worth it to keep hiring. 

Whole thing here.

Comments

[Dave]

As a businessman I have to agree. Arbitrarily raising the minimum raise does little to help minimum wage workers in general. While it may help a few it usually hurts the whole group while increasing prices and inflation for all customers.