Minimum Wage Hike Would Hurt Students



Despite a struggling economy and higher taxes in the last year, President Obama and St. Paul Democrats seem to think raising the minimum wage should be a priority. This is a bad idea right now for several reasons, but one primary downfall is that raising the minimum wage drives up youth unemployment. Young people age 18-25 lose their jobs when companies are forced to pay more for the lowest-paid workers because there is less money to split among employees. Simple math.

But in addition to the economic harm that raising the wage would cause during this fragile and halting recovery, it is important to examine those that make up all workers currently receiving minimum wage.

The Bureau of Labor statistics for 2011 show us that around half of those receiving minimum wage or less are under 25, and 6 in 10 work in the service industry. For many of these workers, tips and commissions supplement the hourly wages received. Part-time workers (working less than 35 hours per week) make up a large chunk. Under Obamacare, rules requiring health care coverage for workers putting in more than 35 hours per week are driving the number of part-timers in America up as companies cope with the new job-killing mandate.

A higher minimum wage will cut employment, reduce access to the entry-level positions that lead to better jobs, and increase poverty.

Employees, of course, will be hurt if companies cut the number of low-wage jobs because of a higher minimum wage. Economists estimate that each 10 percent rise in the minimum wage leads to a 1 to 2 percent decline in the employment of low-skilled workers. Additionally, a 10 percent increase in the minimum wage leads to a 5 to 9 percent drop in the number of teens small businesses employ.

Minimum wage does little to get people out of poverty. Because they can choose among many potential workers for minimum wage jobs, employers often select teenagers from middle-class families over poor adults because the teens have greater job potential. The end result: poor adults remain unemployed and stuck in poverty after being passed over for entry-level jobs.

Remember, in a free-market economy, everybody’s income is someone else’s cost. Capital is free flowing, and by driving up a value in one part of the economy, you are driving it down in another part.

While some workers benefit from an increase in minimum wage, others in supplier industries suffer through job loss or lower wages resulting from the reduced demand for their products and labor. Eventually, even the boost in income for the few is offset by higher prices and lower future wages brought on by reduced economic growth — a net loss for them and the whole community.

Like many of the other policies coming from our liberal leaders, a minimum-wage hike is meant as a social justice gift to the allies and supporters that the Left needs to be successful politically. New taxes on the rich, attacks on capital gains, unionizing ever more industries, and absolute job security for government workers are all part of the social justice agenda that should not surprise us anymore. President Obama successfully provided enough government support to millions of Americans through countless programs, bankrupting the nation, but securing his reelection in the process.

Raising the minimum wage always negatively affects employment opportunity and reduces production.