Posted on 04/30/2005 3:26:27 PM PDT by CHARLITE
As Gov. Rendell and state legislators consider a proposal for a $7 an hour minimum wage, they should also bear in mind Federal Reserve Board Chairman Alan Greenspan's warning that such a move "prevents people who are at the early stages of their careers... from getting a foothold in the ladder of promotions." Wage-hike proponents often argue that minimum-wage employees haven't had a raise since Congress last increased the national rate. But few entering the workforce at the minimum wage stay there for long. Nearly two-thirds get a raise within one to 12 months. Most low-wage earners simply don't need a mandated pay raise; they get one on their own.
That leaves us with a small group of the least skilled, which may remain at a minimum-wage salary for extended periods. A wage boost for these people might seem like an attractive option - except that they are actually the people most likely to lose their jobs following a wage hike. Duke University researchers have found that after an increase in the minimum wage, the lowest skilled adults are crowded out of their jobs as better-educated teenagers (frequently from wealthier families) are drawn into the workforce. Their "need"? Simply to earn money for video games and iPods. But because they require less training, employers eagerly hire these higher-skilled teenagers to get the most out of their higher payroll costs.
Because of disparities in education, job losses often exact a crippling toll on minority communities. Cornell University researchers have determined that after a minimum-wage hike, young African Americans bear four times the employment loss of non-blacks.
In the years following World War II, the unemployment rate for young black males averaged lower than their white counterparts'. But in 1956, a 33 percent increase in the minimum wage precipitated an alarming turnaround. By 1960, unemployment for young black males had nearly doubled to 22.7 percent while increasing only slightly for young whites. By 1981, nearly annual minimum-wage increases had greatly contributed to their 40.7 percent unemployment rate.
Artificially high-wage mandates continue to price many less-educated African Americans out of the labor market. Today, the unemployment rate for young blacks is 93 percent higher than for white youth. Nobel laureate economist Milton Friedman rightly notes that joblessness among so many young blacks "is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum-wage laws."
Proponents of minimum-wage increases typically frame their efforts as a way to rescue society's most economically vulnerable - seniors trying to supplement their Social Security checks or single parents struggling to raise their children. But in Pennsylvania, individuals earning $7 an hour or less have an average family income of nearly $50,000. Even former Clinton Labor Secretary Robert Reich observed that "most minimum-wage earners aren't poor."
A Cornell University study found only 15 percent of prospective wage-hike beneficiaries across the nation are in poor families. Poverty is becoming a phenomenon confined largely to nonworkers. None of them will benefit from a minimum-wage increase.
But they will be hurtby one. As any economist will tell you, businesses with many low-wage employees frequently increase their prices after a minimum-wage hike. Researchers from Stanford University have found that these price increases disproportionately affect the poor. There are more effective approaches to improving the lives of Pennsylvania's low-wage employees. Legislators should consider adopting a state earned income tax credit (EITC) to supplement the hugely successful federal program. The EITC provides substantial tax-free income, but only to those with a job. Economists from the Federal Reserve and Michigan State University have found that beneficiaries increase their work output and enjoy higher earnings, leading them toward self-sufficiency. And unlike minimum-wage increases, the EITC doesn't result in unemployment.
This is in agreement with what others have been saying for a long time, but you can't reason with the irrational people that argue for an increase in the minimum wage.
bump
liberals argue for increased cigarette taxes to curtail smoking...
so higher cigarette prices = less cigarettes smoked
liberals argue for higher gasoline taxes to reduce consumption of gasoline...
so higher gas prices = less gas used
But somehow they never figure out that...
higher labor costs = fewer people employed.
Liberals want to help the poor right out of the entry level job that could start their climb out of poverty. Heck, if they're not poor anymore, why would they have to vote for the democrats????
There will be no solution to black unemployment so longer as there is a unlimited supply of cheap Mexican illegal labor. Send the Mexicans home and the market will bid up wage rates until it becomes attractive for unemployed, black and white Americans, to go back to work. The law breaking employers may suffer and costs may rise but we, us Americans, will all be better off!
I wish I had the nerve to put your tagline onto a bumper sticker for my car.
Char :)
Exactly. When I argue this point with a nitwit, I ask why we just don't raise the min. wage to $5,000 x hour so everybody could be rich? (Some people actually think that's a great idea, but there aren't enough dollars to make it workable). Most people see at least some of the downside at that rate. Just keep cutting it in half ($2,500? $1,250?). The intellectually honest person will see your point. The dishonest are not worth continuing the discussion.
Don't most states already have minimums that exceed the Federal level? I doubt that there are many people actually being paid $5.15 in this country.
Actually, I'm surprised how many set the level with that of the federal gov't: Dep't of Labor, Interactive Minimum Wage Map
Despite whatever the law is, I doubt that many people in this country are actually paid the minimum.
Wouldn't raising the minimum wage to $20 an hour fix the same problem?
Hell, there are people who do no work at all who make more than $5.15 x 40 per week. I'm sure there are a precious few exceptions, but IMHO if one isn't smart enough to find a job worth more than $5.15 x hour, one probably isn't smart enough to generate much more than $2.50 x hour.
Min. Wage laws really undermine federalism as far as state variations in cost of living, local tax rates and requirements, etc.
It might hurt the poor and minorities, but it will be a boon for ILLEGALS.
Yeah, lot's of illegal criminal Mexican wetback aliens running around Pennsylvania stealing jobs from the Amish. Go buy a map!
Re: There aren't enough dollars to make it workable
Just print more money....
The INS estimated in February 2003 that the illegal alien population in Pennsylvania was 49,000 as of January 2000. That represented an increase of 12,000 illegal aliens from the previous INS estimate that as of October 1996 there were 37,000 illegal residents. The latter estimate was a 37 percent increase above the INS estimate for 1992 (27,000).
Only 19 states have larger numbers of illegal resident aliens than Pennsylvania, according to the current INS estimate
http://www.fairus.org/Research/Research.cfm?ID=1389&c=9
http://usinfo.state.gov/eap/Archive_Index/Prepared_Testimony_by_John_M._Morganelli.html
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