Donald Lambro in the Washington Times explains why raising the minimum wage, while good politics, is a bad idea. His reasoning is straightforward — employers will react to the increase in labor costs by cutting jobs. One study finds that for every 10 percent increase in the minimum wage unemployment among minorities rises 3.9 percent and the teenage minority unemployment rate increases by more than 6 percent. The Democrats intend to raise the minimum wage by about 40 percent. The math is not encouraging.
Of course, those who don’t lose their jobs will make more money per hour, but these gains may well be offset by a decrease in the number of hours they are allowed to work. Lambro cites studies showing that the combined impact of lost jobs and reduced hours produces net adverse consequences for low-wage workers.
Lambro focuses on the adverse consequences for of a minimum wage hike on young unskilled workers who need access to entry level positions. In the aftermath of welfare reform, I also wonder about the impact on welfare mothers. As I understand it, eligibility for welfare is now connected to holding down a job. Presumably, many of the jobs welfare recipients are holding down pay at or near the current minimum wage. A reduction in the number of these jobs could cause many welfare mothers to lose not only their job but their welfare check. And even if the employer doesn’t slash minimum wage jobs, it will want more skill in exchange. To the extent that a minimum wage hike encourages individuals with some skills (such as college students looking to work part-time) to take jobs they previously thought paid too little, welfare recipients would likely be pushed out of these positions. That’s probably not the kind of income redistribution the Democrats are hoping for.
Have the Dems thought about this? Do they care?
JOHN responds: Yes. No.
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