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20 States Raise Minimum Wage; Pain for the Poor and Young to Follow

[T]here's a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage by a substantial amount would price working poor people out of the job market.”

“A higher minimum would undoubtedly raise the living standard of the majority of low-wage workers who could keep their jobs. That gain, it is argued, would justify the sacrifice of the minority who became unemployable. The argument isn't convincing. Those at greatest risk from a higher minimum would be young, poor workers, who already face formidable barriers to getting and keeping jobs.”

“A humane society would learn from its mistakes and keep trying. The idea of using a minimum wage to overcome poverty is old, honorable - and fundamentally flawed. It's time to put this hoary debate behind us, and find a better way to improve the lives of people who work very hard for very little.”

Where do these words come from? No, not Milton Friedman, or National Review, or the Heritage Foundation. Those are the words from a New York Times editorial in 1987. Its headline? “The Right Minimum Wage: $0.00.”

A question for the NYT: how is it that some basic laws of economics have managed to render themselves moot in just a couple decades? “Virtual consensus” and “fundamentally flawed” are some pretty strong and authoritative words, aren’t they? (And let it not be forgotten that this was during the Reagan years, when economic conditions were much more favorable than today's Obama malaise.)

With 20 states plus the District of Columbia ringing in 2015 with rises in their minimum wage (some are just by a few cents), it's high time we revisit the inevitable unintended consequences of government-manipulated markets.

As with most every topic of debate, the left wins the PR war soundly (after all, who can possibly argue against a “living” wage?), but loses the war of facts and substance in shocking fashion. The picture painted by the left regarding minimum wage workers is always that of the noble single mother who has to work three jobs just to feed her three hungry children. Discounting all the economic fallacies of higher minimum wage supporters, even that picture couldn't be more false.

According to Mark Wilson of the Cato Institute, based on BLS statistics, of the roughly 1.8 million of minimum wage earners in 2010 (there are approximately 3.3 million today) almost half were teenagers or adults under 24, with a large majority of them living in families with incomes of more than double the poverty line, and only 20.8 percent of all minimum wage workers were family heads or spouses working full time. Only 11.3 percent of the workers who stood to gain from an increased minimum wage even lived in “poor” households.

Some basic facts of minimum wage are:

  • It prices younger and low-skilled people out of the market, creating a more vicious cycle of poverty and government dependence.
  • It forces many small and mid-sized firms to shift full-time workers to part time to ameliorate the costs.
  • It leads to higher unemployment, as many businesses are forced to employ other methods of cost-saving measures (how does anyone think raising the cost of labor is going to somehow shift the trend away from increased self-checkout machines and other robotics?)
  • It raises consumer prices for many goods, most notably food items.
  • There is very little evidence that it reduces the poverty levels of those fortunate enough to keep their jobs.

Almost one in four Americans 25-34 reportedly are not working. Over 80 percent of black males 16-19 are reportedly not working. Almost one in seven of all Americans are reportedly underemployed. How exactly would raising the cost of labor help with this dire picture?

Combined with the Obamacare employer mandates kicking in this year, 2015 could be a painful one for countless businesses and those unemployed or underemployed. Just imagine how much worse it'd be nationwide if Obama and company got their way with a 28-plus percent bump in the national minimum wage, or if it weren't for these painfully pesky record-low oil prices.

2 comments
stonestone's picture
stone stone
01/21/2015

I spent years working at some if those crappy jobs that pay minimum wages. I now make a decent income and will NEVER darken the door of any of those crappy companies who treat their employees like garbage. Calling a rise in minimum wage a negative thing is idiotic

eby_ebyjason974's picture
eby_ebyjason974
01/14/2015

Anyone not liking where they work must go find another job! This is The United States of America !! This is the way its done here. If you think we can dump on our employers you should go live in one of the countries where they can tear their employers apart. Where they have free health care. Where they dont have taxes...

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