President Obama wants to pass a minimum-wage hike by the end of the year and the Senate, which will soon vote on the so-called Fair Minimum Wage Act to raise the federal minimum from $7.25 to $10.10 an hour, is poised to do his bidding. Supporters claim that the “compassionate” regulation would boost the wages of low-income workers. At first glance, that sounds great! Who doesn’t want to get a raise? But as the late economist Milton Friedman said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”
Who is the “arbiter of fairness” that decided no person should be permitted to work for under $10.10 an hour? Why not $15? $18? $50? Even some strong advocates of the minimum wage understand the dangers of a “too high” minimum wage. They recognize that certain people can’t get hired at $50 an hour. But what about the people who have trouble getting a job at $10.10?
In theory, the minimum wage is supposed to help the poor. But in a study conducted by the American Action Forum found that only 1.5 percent of people in families with incomes below the federal poverty line earned a wage at or below $10.10 an hour. Who is the largest demographic of minimum wage earners?Teenagers from middle class families. Most people with minimum wage jobs are young and unskilled.
Some of these minimum wage jobs might not be the most glamorous in the world. (I scrubbed toilets at a greasy pizza shop for $5.15 an hour when I was 15.) The purpose of the majority of these entry level jobs is for people to gain skills and work experience to climb up the career ladder.
And let me tell you, it wasn’t easy getting my first job cleaning up unspeakable things from the public bathroom stalls. My resume was blank. I had no real job experience or even a high school diploma. The other restaurants and retail shops in town told me: “Not interested. Thank you.” How am I supposed to get job experience if no one is willing to hire me because I have no experience?
I just wanted a job. A job that pays money was better than having no job at all. When I finally got one, I was happy to finally have something to add under “job experience” on my resume. And that job experience made it possible for me to get better-paying jobs down the road.
It’s misleading to say that most people are “stuck” in minimum wage jobs. An Employment Policies Institute study showed that about two-thirds of all minimum wage earners get a raise within the first 1 to 12 months on the job. These raises in wages happen without government legislation. As people gain valuable skills, employers are inclined to increase their wages to keep them around and not looking for other jobs.
There is a strong correlation between youth unemployment and minimum wage hikes. Many inexperienced teenagers won’t be able to get a job if the minimum wage increases. Fewer employers will be willing to get a chance on them. Some people will get fired. Countless employers won’t be able to afford paying unskilled workers a higher wage.
The teenage unemployment in the United States is about 23.7 percent. For black teenagers, unemployment is a shocking 41.6 percent. That does not even include the teenagers who have given up looking for jobs. Do we really want to implement a law that prevents these young people from getting their start?
Not all minimum wage earners are young people. Some are mothers that are entering the workforce for the first time to provide a second income to their household. Some are recent adult immigrants that are not yet fully fluent in English. Any hike in the minimum wage will make these people susceptible to layoffs. Particularly in the latter case, some people will opt to illegally work under the table for less than minimum wage.
In spite of good intentions, increasing the minimum wage will have disastrous effects on the economy. The people it’s supposed to help will be worse off if they can’t even get a job to pay their bills.