Respond To Minimum Wage Proposals

Gov. Jerry Brown said Wednesday (9/11/13) that he supports raising the minimum wage in California to $10 an hour, urging lawmakers to approve a bill that was amended Wednesday and awaits action in the Senate. (One way to respond to this counter-productive political issue below)
From: Romancing The Voters, Chapter 8

 Increasing Minimum Wage Would Generate Adverse Results

 “If we started in 1960 … then the minimum wage today would be about $22 an hour” Sen.Elizabeth Warren

President Obama has called for raising the minimum wage, which in reality is a “learning wage,” to $9.00 declaring even this is not enough to live on. If people can’t survive on $9.00 per hour, why the hypocrisy? Why not raise it to the $22 Senator Warren suggests or $35 an hour as New York labor unions are advocating? Low skilled workers who receive minimum wages comprise only 4.7% of hourly workers, according to the Bureau of Labor Statistics (2012).

The Department of Labor reports one-tenth of those receiving the minimum wage, who were heads of families qualified for Earned Income Tax Credits to supplement their wages. The primary beneficiaries of minimum wage increases are not the 4.7% but those ratcheted above the new minimum wage that will get a step up in pay grades, and those with Union contracts stipulating increases whenever the minimum wage increases.

My very first job paid less than minimum wage. My boss thought I should first learn to show up for work on time and docked me when I didn’t. He also insisted I learn to show up the day after payday when my buddies wanted to go to the beach. He started me out in his small five-man company at a “learning wage.” That’s really what a minimum wage is, a learning wage. It’s not supposed to support a family. After many years of wage increases I eventually wound up owning the company.

It’s extremely rare for a person who can read, write and speak English to be stuck at the minimum wage for more than a year. According to the Bureau of Labor Statistics, 63 percent of minimum-wage workers receive raises within one year of employment. Less than 1 percent of all wage earners earn the minimum wage after three years.

While it’s claimed there’s no impact on employment, as government-imposed wage rates rise, unfortunately so do job qualifications rise requiring more experienced workers. Therefore, less skilled workers become “unemployable.” Advocates for increasing the minimum wage apparently believe it’s better to have no job than a low-paying one. It’s their “intentions” that count. One result of raising the “learning wage” has been millions of idle, restless teenagers on the streets with a lot of time on their hands for mischief.
Source: Courtesy Mark Perry, prof. of economics, University of Michigan-Flint

The irrefutable evidence from the Department of Labor shows that nearly every time the minimum wage has been raised since 1948, unemployment has increased. If you track the federal minimum wage, you’ll see that unemployment among teenagers, particularly minorities, increased from 9.4 percent among blacks in 1948 to 32.5 percent in 2004, and from 10.2 percent for whites to 17.2 percent in 2004. Yes, blacks formerly had lower unemployment rates than whites. (Handbook of Labor Statistics, pp. 153-55)

To update Nobel Laureate Paul Samuelson’s 1976 statement: “What good does it do a black youth to know that an employer must pay him $9.00 per an hour if the fact that he must be paid that amount is what keeps him from getting a job?”

There are six official government measures of unemployment, The media typically reports only U-3 of the six categories ranging from U-1to U-6. Like the Consumer Price Index (CPI), the definitions are changed periodically. The minimum wage makes many people unemployable while helping a few at the expense of others. Why is this so? Well, economic law tells us that if the price of any good increases people buy less. This is true for gasoline. It is true for cell phones. It’s true for blackberries. (I love blackberries. When they are $4.99 a box, I don’t buy them. When they’re $1.50 I may buy them. When they’re 99 cents I buy five boxes at a time.)

It is also true for labor services. Economist Thomas Sowell points out that, “Every one of us would be ‘unemployable’ if our pay rates were raised high enough.” You don’t think so? Go demand that your boss double your salary right now. Do you think your job would be any more secure if the government demanded that your boss double your salary?

When I was young all elevators had operators in every car; gas stations had people wash your windows when they pumped your gas and checked your oil; newspapers were delivered by teenagers (including myself); and millions of neighbor’s lawns were mowed by teenagers. Continuous increases in the “learning wage” over time abolished millions of these jobs for teenagers. Petty thefts and vandalism by restless teenagers have increased as their job opportunities have decreased.

If increasing wages by government edict truly has no significant adverse impacts, as many advocates claim, then we should tell the Chinese, Indian, African and South American governments that all that’s needed to be as rich as America is to pass a law and simply mandate higher wages.

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