Raising the minimum wage makes minimal sense

by Beacon Staff • December 6, 2006

House Democrats have made raising the minimum wage as one of their first priorities. The college and high school aged demographic is most affected by minimum wage legislation.,So often, debates over policy in Washington means little to the average college student. The recent discussion regarding the minimum wage, however, is no such case.

House Democrats have made raising the minimum wage as one of their first priorities. The college and high school aged demographic is most affected by minimum wage legislation. The majority of minimum wage earners are younger than 25 and one-fourth are between the age of 16 and 19.

Mandatory wage increases may even negatively affect Emerson students when they go home over break to work. Economists estimate that for every 10 percent increase in minimum wage, 1-2 percent of youths' jobs are destroyed.

According to The Wall Street Journal, "a federal increase to $7.25, would ... destroy about 800,000 to 1.6 million youths' jobs." Politicians ignore common sense economics, presuming that no repercussions would occur as a result of raising the minimum wage.

It's suggested by people such as Speaker of the House Nancy Pelosi that raising the minimum wage increases productivity and decreases turnover because employees are paid more "fairly." Minimum wage hikes do not guarantee employees more productive and there is no evidence that higher minimum wages do decrease turnover.

It seems that turnover in part-time minimum wage jobs would be high among 16 to 19 year olds, who do not necessarily intend to be grocery baggers or in food service for the long-term.

If increasing the minimum wage does not increase productivity or improve turnover, then what exactly does it do?

For one, it's a philanthropic sounding platform and plays well with the public.

Secondly, it eliminates jobs, although Pelosi and others may not acknowledge this consequence. As an advocate for increasing minimum wage promising to raise the current minimum wage of $5.15 to $7.25, Pelosi broadcasts that the increase would benefit 14.9 million workers, yet this statistic assumes zero job loss.

The job losses would not affect high-level positions, but the low-wage earning employees whom the laws are attempting to aid.

The Cato Institute, a libertarian think-tank, conducted a study during the 1990-1991 increase in minimum wage and concluded that the "highest percentage of low-wage workers is also the group in which employment shows the greatest drop."

A decline in the employment of teenage men went from 43 percent employment to 36.3 percent after the wage increase. Also, the employment in the 20 to 24 age range fell significantly in comparison to older employees, who typically earn higher wages.

Increasing minimum wage is not a smart policy for reducing poverty and, in fact, could hurt those in need of a job.

If making job hunting an even more daunting task wasn't enough, increasing minimum wage can drive businesses to work low-paid employees more strenuously, because fewer employees must maintain the same standard of productivity.

The laws of economics still apply and lawmakers cannot assume that employers will not be affected and need to evolve in order to remain profitable. The unemployed, the high school and college student, and even the current low-wage employee will all be negatively impacted by increases in minimum wage.

Although the shift of power in the House of Representatives may provide a much needed balance in our government, by implementing foolish economic policies, the Democrats are showing that they still lack innovation and competence.