Saturday, February 16, 2013

Implications of a Minimum Wage Rate Increase

WSJ:  The Minority Youth Unemployment Act:  A higher minimum wage will hurt Obama's most loyal supporters.
Key Points by the Author:

  • About 85% of the studies "find a negative employment effect on low-skilled workers.
  • The minimum wage is also an ineffective way to reduce poverty. Most families in poverty don't have someone who works, so making it more difficult to get a job exacerbates poverty.
  • when the jobless rate is high, as it still is in California and New York, the increase punishes minority youth in particular.
  • A study by economists William Even of Miami University and David Macpherson of Trinity University concludes that in the 21 states where the full 40% wage increase took effect, "the consequences of the minimum wage for black young adults without a diploma were actually worse than the consequences of the Great Recession."
  •  after the July 2009 increase 600,000 teen jobs disappeared in the next six months even as GDP expanded.
  • Mr. Obama's economists know all this, but then the minimum wage has nothing to do with poverty or unemployment. It's a political play to reward unions and box in Republicans. 


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