Here's some economic logic to ponder. The unemployment rate in June for American teenagers was 24%, for black teens it was 38%, and even White House economists are predicting more job losses. So how about raising the cost of that teenage labor?
Sorry to say, but that's precisely what will happen on July 24, when the minimum wage will increase to $7.25 an hour from $6.55. The national wage floor will have increased 41% since the three-step hike was approved by the Democratic Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That's a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins.
There's been a long and spirited debate among economists about who gets hurt and who benefits when the minimum wage rises. But in a 2006 National Bureau of Economic Research paper, economists David Neumark of the University of California, Irvine, and William Wascher of the Federal Reserve Bank reviewed the voluminous literature over the past 30 years and came to two almost universally acknowledged conclusions.
First, "a sizable majority of the studies give a relatively consistent (though not always statistically significant) indication of negative employment effects." Second, "studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects."
Proponents argue that millions of workers will benefit from the bigger paychecks. But about two of every three full-time minimum-wage workers get a pay raise anyway within a year on the job. Meanwhile, those who lose their jobs or who never get a job in the first place get a minimum wage of $0.
Mr. Neumark calculates that the 70-cent per-hour minimum wage hike this month would kill "about 300,000 jobs for those between the ages of 16-24." Single working mothers would also be among those most hurt.
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2 comments:
http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm
From the govt...
When I was 16 it was the 70's. I was all fired up about getting that first job. I heard that Carter was trying to raise the minimum wage. I thought that was a great idea too. Until I realized I could not find a job. I thought to myself, I'm working the real minimum wage: $0.00 an hour, filling out applications.
One of the employers mentioned he would be able to hire me but only if one of his other employees left. I realized at that very moment that employers salaries are constrained and that a minimum wage might be keeping me from landing that first precious job. On that day, though I could not yet tell you what socialism was nor how it came about, the seeds of my hatred for socialism were sewn.
Eventually I did get that minimum wage job. Some may have wanted to thank Teddy Kennedy and Jimmy Carter for giving them the wonderful opportunity to make $2.65 an hour. I on the other hand had beiiger plans and did not have the patience to wai for Washington to madate my next 10 centr raise.
I bettered myself and make more money now than I ever dreamed possible. And to my French-loving friends, no I have not taken anyone's job to do it. I contribute to the economic system and probably create many additional jobs in the process.
My advice to young people: If you are waiting around for Obama, Pelosi, or Reid to make your life better, you are in for a long wait. Make things happen for yourself and you will do far more good for youself and others than any beltway bureaucrat.
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