Minimum Wages: Few Benefits, Many Consequences

American Legislator ^ | 2-10-14 | Will Freeland

[ThethoughtsofGreg]

President Obama’s recent State of the Union address was the culmination of months of advocacy from Democrats and activists for a higher minimum wage. The President proposed a raise to the minimum wage for federal contractors by executive order to $10.10 per hour and called on Congress to raise the national minimum wage for all workers to the same mark, along with indexing it to inflation. A raise of the national minimum wage was framed as giving low income workers the “living wage” they deserve and fighting perceived growth in income inequality in America. Though the President’s proposal is well intentioned, it faces many ignored unintended consequences: higher unemployment for the young, unexperienced and low-skilled workers. Moreover, the unemployment caused by a higher minimum wage has long lasting—perhaps permanent—effects on the individuals a minimum wage increase is designed to help the very most.

The Case Against The Minimum Wage

The case that a higher minimum wages reduces employment opportunity is fairly intuitive. Minimum wage laws make labor agreements illegal for employers who want to hire employees who fall below the legal minimum wage. The laws effectively force employers to only employ a worker if the net value that that worker can add to the business is over the minimum wage hurdle—say $7.25 or $10.10. Businesses do not hire workers as a charitable endeavor, but instead employ them to raise their profitability with higher output or better service. The higher the wage, the fewer entry level workers a business is able to employ without losing money on the deal. As a result, many employers are unwilling to put their company at risk by acquiring workers they cannot afford, which explains why the job market tends to contract when the minimum wage is increased.

[Blood of Tyrants]

As usual, liberals are always generous with other people’s money.

[bgill]

What part of MINIMUM wage do people not understand?

[RWB Patriot]

I keep pointing out these facts to the people calling for the minimum wage to be raised and they just don’t seem to sink in.

Maybe when a couple thousand high school graduates finally start rioting over their post-school career prospects being butchered, they’ll start waking up.

[RWB Patriot]

You know, government never touches taxes when they increase the minimum wage, so does anyone beside me think that increasing the minimum wage is government’s way of getting more tax revenues without visibly raising taxes?

Of course, the effects are still the same.