Four Reasons NOT to Raise the Minimum Wage
The debate over minimum wage continues to rage across the country. But, would raising the minimum wage actually harm the very people it is purportedly designed to help?
Research shows that businesses would respond to the increased costs by reducing employment, particularly for low-skilled workers. Some businesses may even pass the higher costs on to consumers. Despite the hope of proponents, raising the minimum wage would do little, if anything, to decrease poverty.
Here are four reasons NOT to raise the minimum wage….
It Would Result In Job Loss
Evidence of job losses have been found since the earliest imposition of the minimum wage
- The first 25-cent minimum wage in 1938 resulted in significant job losses.
- Minimum wage increases recently imposed in American Samoa resulted in economic effects so pronounced that President Obama signed into law a bill postponing them.
- A 2006 review of more than 100 minimum wage studies by David Neumark and William Wascher found that about two-thirds found negative employment effects.
- In 2010, Joseph Sabia and Richard Burkhauser estimated: “nearly 1.3 million jobs will be lost if the federal minimum wage is increased to $9.50 per hour.”
It Would Hurt Low-Skilled Workers
Evidence shows minimum wage increases disproportionally hurt the people they’re supposed to help
- The 2006 Neumark and Wascher review found the literature “as largely solidifying the conventional view that minimum wages reduce employment among low-skilled workers.”
- A 2012 analysis of the New York State minimum wage increase from $5.15 to $6.75 per hour found a “20.2 to 21.8 percent reduction in the employment of younger less-educated individuals.”
- A 2010 analysis by Michael J. Hicks found: “the latest round of minimum wage increases” account “for roughly 550,000 fewer part-time jobs,” including “roughly 310,000 fewer teenagers working part-time.”
It Would Have Little Effect On Reducing Poverty
Evidence suggests that minimum wage increases don’t reduce poverty
- In the previous federal minimum wage increase from $5.15 to $7.25, only 15 percent of the workers who were expected to gain from it lived in poor households, according to a 2012 review by Mark Wilson. If the minimum were today raised to $9.50, only 11 percent of workers who would gain live in poor households.
- The 2012 Wilson review noted: “Since 1995, eight studies have examined the income and poverty effects of minimum wage increases, and all but one have found that past minimum wage hikes had no effect on poverty.”
- The 2012 Wilson review noted: “One recent academic study found that both state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates.”
It May Result In Higher Prices For Consumers
The costs of minimum wage increases must be paid by someone
- The 2012 Wilson review noted: A 2004 “review of more than 20 minimum wage studies looking at price effects found that a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent.”
- A 2007 study from the Federal Reserve Bank of Chicago found that restaurant prices increase in response to minimum wage increases.
Anonymous asked: Okay, I don't personally believe in many of the things that are on your blog, especially with the "homeless spikes" and being against raising minimum wage. 1. How is putting spikes anywhere helping the homeless? We should be trying to get them off the street not sweeping them under the rug. 2. The economy works by giving people enough money to spend on goods and services so that or can be put back into the economy. Raising minimum wage would actually be beneficial as more people can buy things.
Oh wow. You really have no idea how the real world works, do you? Ok, lemme break it down a bit:
1. The spikes are not to help the homeless. They are to help the property owner who has invested what would probably amount to their entire life’s fortune in their business/building. They are there to discourage anyone, not just the homeless, from loitering and damaging the property. There are countless programs, charities and shelters for the homeless in particular, so the spikes are really an excuse to bitch. Instead of complaining about a private property owner protecting his investment, how about you put your money and time where your mouth is and volunteer/donate to a homeless shelter or food kitchen. It would go a lot farther than your phony internet activism that feeds and houses exactly zero people.
2. You could not be more wrong about the economy. Wages are a by product of the economy, not it’s engine. Think of it like this: You are making paper clips. After you factor in manufacturing costs, overhead, labor costs and the like, you can sell your paper clips for .10¢ a piece. Now let’s say some government official comes and tells you that you have to raise your labor costs from $8/hr to $15/hr. This raise is not due to increased efficiency, but just some arbitrary increase because it makes people feel better and can get a politician re-elected. What do you think happens? Do you, as a manufacturer, eat the extra cost? You already only make a paltry 10-15% per sale. No, what you do is raise the price per paper clip to .20¢. Of course, the wage increase is not for paper clip manufacturers alone, so EVERYTHING goes up in cost. .99¢ hamburgers? Now $2. $3 gallon of milk? Now $6. What this wage increase does is simply raise prices for EVERYTHING.
What good is doubling your income if everything doubles in price? You “purchasing power” does not increase in the long run when you arbitrarily raise the minimum wage. Production, profit and efficiency mandate what wages are. Not the other way around.
My mother is looking for a job right now. Thank God for low paying jobs that can get her by until she finds a better one. Screw minimum wage BS.
Anonymous asked: The point of that post is to show that 7 dollars an hour is *not* sufficient for a person to raise a child, as well as to properly come by. We want people to be able to survive and sufficiently raise children. Besides it isn't that easy for people to get jobs, often not for people in such situations. Discrimination and prejudice often plays role into job decision making - and even if getting the job it's usually bad jobs - minimum wage jobs.
Well bummer. If you have a child maybe you should try to find a different job that pays better.
where are people supposed to get a job from if they cant even afford to have their kid babysat?
Oh come on.
im asking you a serious question, where do you expect these people to get other jobs?
what do they do with their kids then?
So you have time to work full time at mcdonalds but not enough time to apply for other jobs?
Paying people more doesn’t just magically make them wealthier. After a short time prices of all goods and services rise to compensate for the higher wages being paid to employees, thus making those people’s purchasing power about the same as before they got the “raise.” That is why milk in SE AL. is half that of milk in NYC.
But hey, when people realize they don’t have any more purchasing power, you can always buy their vote with more pormises of higher pay, huh?
Who’s up for a $26 minimum wage?
I don’t think I’ve ever encountered such staggering ignorance. It’s truly amazing. Barbara Lee, who apparently knows approximately as much about economics as I do about 18th century French lesbian poetry, said she would love a $26 per hour minimum wage for her home state of California.
From the DC:
California Democratic congresswoman Barbara Lee expressed support for a $26 minimum wage in her state — a move Republican congressman Andy Harris encouraged, assuming jobs would rapidly flee California to his state of Maryland.
Lee and Harris appeared Friday on CNN’s “Crossfire,” hosted by former Obama advisor Van Jones and former Republican Speaker of the House Newt Gingrich. The panel discussed the proposed increase in the federal minimum wage from $7.25 to $10.10 per hour.
“Let me ask you this question, you’re a good advocate for this,” Gingrich asked Lee. “The mayor of Seattle is proposing that the minimum wage ought to go up to $15 an hour.”
“Good for him,” Lee responded. “In California — more than likely, from what I remembered — a living wage where people could live and take care of their families and move toward achieving the American dream was about $25, $26 an hour.”
“So would you support that as a minimum wage for California?” Gingrich asked.
“Absolutely I would support it for California.
Face, meet palm. Seriously, this is what we’re up against folks. How do they ever win elections?
If raising the minimum wage is the answer, why not raise it to $1,000? Why not $1 million? Just think of it, even janitors and fast food workers could live in mansions in Hawaii! If your only argument for why this wouldn’t work is “oh please, that’s just ridiculous”, then you need to think about why it wouldn’t work and apply that same logic to any other minimum wage hike.
In case you’re in the dark about why raising the minimum wage would be devastating for poor people, go here.