Posted on 03/23/2005 2:41:51 AM PST by JohnHuang2
Sens. Edward Kennedy, D-Mass., and Rick Santorum, R-Pa., both introduced proposals to increase the minimum wage from its current $5.15 an hour. Sen. Kennedy's proposal would have raised the minimum wage to $7.25 in three steps over 26 months, while Sen. Santorum's would have raised it to $6.25 in two steps over 18 months. Two weeks ago, both measures failed passage in the Senate.
Sen. Kennedy said, "I believe that anyone who works 40 hours a week, 52 weeks a year, should not live in poverty in the richest country in the world," after telling fellow senators that minimum wage workers earn $5,000 below the poverty line for a family of three. Sen. Santorum said, "I feel very comfortable that our proposal keeps the balance between the ability of lower-skilled employees to enter the work force at a wage in which they are compensated for the skills they bring to the job."
The idea that minimum-wage legislation is an anti-poverty tool is simply sheer nonsense. Were it an anti-poverty weapon, we might save loads of foreign aid expenditures simply by advising legislators in the world's poorest countries, such as Haiti, Bangladesh and Ethiopia, to legislate higher minimum wages. Even applied to the United States, there's little evidence suggesting that increases in the minimum wage help the poor. Plus, according to the Bureau of Labor Statistics, only 2.2 percent of working adults earn the minimum wage.
The crucial question for any policy is not what are its intentions but what are its effects? One of its effects is readily seen by putting yourself in the place of an employer and asking: If I must pay $6.25 or $7.25 an hour to whomever I hire, does it make sense for me to hire a worker whose skills enable him to produce only $4 worth of value per hour? Most employers would view doing so as a losing economic proposition. Thus, one effect of minimum wages is that of discriminating against the employment of low-skilled workers.
For the most part, teenagers dominate the low-skilled worker category. They lack the maturity, skills and experience of adults. Black teenagers not only share those characteristics, but they are additionally burdened by grossly fraudulent education, making them even lower skilled.
Bureau of Labor Statistics unemployment data confirms the economic prediction about minimum-wage effects. Currently, the teen unemployment rate is 16 percent for whites and 32 percent for blacks. In 1948, the unemployment rate for black teens (16-17) was lower (9.4 percent) than white teens (10.2 percent). Plus, black teens were more active in the labor force.
How might we explain that? How about arguing that there was less racial discrimination in 1948, or back then black teens were more highly educated than white teens? Of course, such arguments would be nonsense. The fact of the matter is that while there was a minimum wage of 40 cents an hour prior to 1948, it had been essentially repealed by the post-World War II inflation; however, with successive increases in the minimum wage, black teen unemployment rose relative to white teens to where it has become permanently double that of white teens.
If the minimum-wage law has these effects, then how does it pass political muster? The current Social Security debate over private accounts gives us a hint. In the political arena, you dump on people who can't dump back on you. Few politicians owe their office to the youth vote. Despite the "concern for the children" malarkey they spout, it's voting-age adults to whom politicians are beholden. It turns out that adults benefit from the discriminatory effects of minimum wages, and older adults benefit from Social Security intergenerational transfers.
I suspect lack of wide-spread welfare and other socialist programs, and parental and societal shunning of jobless bums, were major contributing factors.
Kennedy said, "I believe that anyone who works 40 hours a week, 52 weeks a year, should not live in poverty in the richest country in the world,"
This is just poor logic. Hours worked does not equal value to the employer or to the customer who ultimately pays the wages. Besides, is he really saying that $7.15 per hour would move that person up out of poverty.
If Kennedy's proposal made any sense there'd be no reason to make the minimum wage so low at $7+/hour. He should propose to pay them $40,000-50,000/year. Heck, he could even propose that they make as much as he does! But he knows you really can't artificially create wealth.
Minimum wage laws are just part of teenage unemployment. Limits on hours that teens can work during the school year, added 'paperwork' for the employers who hire teens, and being barred from operating a lot of types of machinery are all contributing factors. From the employers' perspective, a lot of the time, hiring a teen is more hassle than it's worth. Suffice to say that, in 1948, there were simply a wider variety of jobs available for teens. The options available to the youth of today have drastically narrowed.
I just love it when a man who has never hit a lick in all his life tells us what a days work is worth.
Raise the minimum wage and all you do is raise the amount that is called the Poverty level.
The same people will be earning the minimum wage , but that amount of money will buy less as the Companies raise prices to compensate. Why cant Fat Ted understand that?
Bump for later
Raise the minimum wage and all you do is raise the amount that is called the Poverty level.
Exactly, but that's not quite all you do. When you fuel inflation, as raising the minimum wage does, you are increasing the numbers of people at the poverty level. And, in addition, you are restraining the creation of new jobs along w/ probably actually decreasing job numbers. A burger emporium is going to look at trying to trim staff, for instance. And Granny, who is on a fixed income, is able to purchase less, so demand decreases.
With energy driven Inflation about to kick in the minmum wage can go to $12 per hour and not change the overall poverty equation.
We are about to see 1979 all over. Expect small cars to come back ( K-Car, part 2). Expect Winnebago stock to crash. Interest rates will come up, real estate prices will plunge, the building trades will vapor lock.
If you have fixed rate loans the ride will be bumpy, but you will be ok. If you have CD's locked in for the next 60 months the ride will be really rough.
Disclaimer: If I was smart enough tp predict the future I wouldn't be leaving for work in a couple of minutes, my track record for financial predictions is poor at best.
It stuns me that Corporate America just takes any ole crap Washington throws their way. What if the top five employers in this nation got together and annouced that as of June 1st, they will no longer be acting as tax collectors for the federal or state governments.
(Damn! I sound like a DU dumbass!)
They [illegal immigrants] can operate the machinery because of no health coverage...
Most of those jobs aren't available to teens in the first place. By barring a significant part of the workforce from certain types of jobs, voids are created.
The biggest "hit" to teen employment is the FACT that illegals are taking most of the entry level jobs in the trades.
This applies to black youth too.
W. Williams has a somewhat myopic view here.
Gee Senator how much would you pay someone who can't make change, who has no serious work skills, dropped out of high school, has poor work attendance, often arrives at work drunk or high and spends most of their work time screwing around?
With today's modern communications why can't instructors in India lecture undergraduates using two-way HD, large screen images?
Why can't papers, tests, etc. be faxed offshore and graded in India?
College professors. Who needs 'em?
Keep going Walter...The disparate impact of minimum wage laws means they are racist!
Minimum wage is welfare for slumlords and inner-city sweatshops. For anyone with a car, the actual minimum wage, "couch" minimum, is more like $7.00/hour. The bus riding labor pool is the greatest anchor on wage rates.
Most industrial jobs are closed by WorkComp to those under 18.
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