More money, more problems

Minimum-wage increases actually cost jobs

Remember your first summer job?


You most assuredly remember the wage. That was, after all, why you got a job in the first place.

But your fondest recollections probably have nothing to do with filling out W-2s or cashing paychecks.

You probably recall a sense of pride in wearing a uniform and performing a task for someone other than your parents. You probably had newfound feelings of maturity when entrusted with a store key or an expensive piece of equipment. You remember small lessons – something people now call the “invisible curriculum” – that helped forge a lifelong work ethic.

It’s too bad fewer young people have the chance to share these experiences.

The teen jobless rate has been above 20 percent for 66 straight months – the longest stretch since the U.S. Bureau of Labor Statistics began tracking the number in 1948. And it would only get worse under the proposed $10.10 federal minimum wage plan President Obama is pushing.

The 40-percent increase would put entry-level work further out of reach for teens as companies cut back or eliminate low-skilled positions.

Despite comprising more than half of minimum-wage workers, teens and young adults have been largely excluded from the national debate. Instead, policy makers hope to sway public opinion by focusing on household breadwinners, a statistically small group in comparison but one with a highly emotional plight.

But it’s not the relatively few people trying to support a family on minimum wage likely to be hurt; it’s the young and unskilled who most likely will find themselves priced out of the work force.

Research from the nonpartisan Employment Policies Institute shows that every 10 percent increase in the minimum wage reduces teen employment at small businesses by 4.6 to 9 percent. The government’s own Congressional Budget Office has already estimated
the minimum wage increase would eliminate up to 1 million jobs.

Yet Obama continues to push the wage issue as an election-year strategy to rally his Democratic base.

Sadly, it could work, as liberals are gullible enough to believe that making workers 40 percent more expensive makes employers want them more.

Those grounded in reality – where the natural laws of economics reign supreme – know differently.

The last time the nation had a 40 percent minimum-wage increase – the three hikes between 2007 and 2009 – more than 114,000 young adults lost jobs, according to an analysis by economists at Miami and Trinity universities. For those with fewer than 12 years of education – a group most likely to be teenagers – the loss translated to a 12.4 percent drop in employment.

Another sobering statistic from the prior minimum-wage increase is that teenage work participation plummeted below 40 percent, meaning more than 60 percent of teens either couldn’t get a job or gave up trying to find one.

Though it’s true the 2007-09 increase occurred at the worst possible time – as the U.S. economy was entering a recession – it’s not as though the economy is currently booming.

Adding a minimum wage increase on top of the Obama administration’s other job- and investment-killing measures – Obamacare mandates, environmental regulations, energy policies – is a recipe for economic disaster.

The companies most likely to hire a young person – such as retailers, grocery stores and restaurants – already tend to operate on razor-thin profit margins. It’s not as if they can simply raise prices to offset a major increase in labor costs. They simply would adopt self-service technology at a faster rate.

Why would we expect any different? Should we expect companies to take an increase in labor costs and just go about business as usual?

And, really, does the average teen worker possess skills that merit $10 an hour?

Of course not. That is why the teen employment rate is at its lowest levels in six decades and will only get worse as “the minimum” climbs higher. That is why businesses in Seattle have successfully launched a recall effort in November to strike down the city’s $15 minimum wage law that took effect last month.

Citizens of that Northwestern city have had a chance to ask themselves a question the rest of us may soon be forced to address: What good is increasing the minimum wage if it raises relatively few wages, stifles job growth and makes it nearly impossible for the young to find paying work?

Most of us would rather see teens working $7.25-an-hour jobs instead of sitting around the house all summer earning nothing.



Sat, 01/20/2018 - 00:00

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