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Tuesday, July 03, 2007

Minimum Wage Increase Hurts Jobs

The National Center for Policy Analysis examines a piece from todays Wall Street Journal entitled "Minimum Wage, Jobless Kids."

It shows how the minimum wage increase in New York reduced job opportunities for 14-21 year olds

The "Summer Help" study assesses New York City's publicly funded Summer Youth Employment Program (SYEP), which each year matches tens of thousands of young people between the ages of 14 and 21 with employers ranging from the local library to investment banks:

New York's teen employment rate is 16.9 percent, the lowest of any big city and half of the 34.6 percent national average.

Today, however, the New York program serves 20 percent fewer young adults than it did in 1999, and last year it turned away 30,000 mostly black and Latino applicants.


The NCPA piece concludes:
As an antipoverty measure, these laws are inefficient because most people who are poor already earn more than the minimum and most who do earn the minimum aren't living in poverty, says the Journal.

This was also shown in a 2007 impact study on a minimum wage increase in South Dakota.

Combining that data with a 2005 study which showed a grand total of 35 people in South Dakota making minimum wage, you get

- 35 people lifted from the current minimum wage
- 375 out of a job
- a net loss of $4.5 million
- $1.22 lost for every dollar gained

Much better to let an employee and employer negotiate the value of an employees labor than to have government arbitrarily determine that value. That's what a free society does. That's the American way.


1 comments:

Anonymous said...

The "Review and Outlook" states, "As an antipoverty measure, these laws are inefficient because most people who are poor already earn more than the minimum, and most who do earn the minimum aren't living in poverty. They are retirees, homemakers, part-time workers, and teenagers in the Big Apple -- fewer of whom will have summer jobs in the future thanks to the higher minimum wage." Are there data to support this?

Arguments against the minimum wage that I have heard is that that the minimum wage is for the unskilled, and that they don't stay in minimum wage jobs for long because they become skilled quickly, and then move on to better jobs. The comment above, about retirees and homemakers, implies to me that some are happy with earning the minimum wage.

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