Minimum Wage, Maximum Hype
George Will examines the push for raising the minimum wage and makes a number of excellent points. Not that he believes that will change anything because for a number of reasons the fix is already in on this terrible idea.
Most of the working poor earn more than the minimum wage, and most of the 0.6 percent (479,000 in 2005) of America's wage workers earning the minimum wage are not poor. Only one in five workers earning the federal minimum lives in families with earnings below the poverty line. Sixty percent work part time, and their average household income is well over $40,000. (The average and median household incomes are $63,344 and $46,326, respectively.)
Forty percent of American workers are salaried. Of the 75.6 million paid by the hour, 1.9 million earn the federal minimum or less, and of these, more than half are under 25 and more than a quarter are between ages 16 and 19. Many are students or other part-time workers. Sixty percent of those earning the federal minimum or less work in restaurants and bars and earn tips — often untaxed, perhaps — in addition to wages. Two-thirds of those earning the federal minimum today will, a year from now, have been promoted and be earning 10 percent more. Raising the minimum wage predictably makes work more attractive relative to school for some teenagers and raises the dropout rate. Two scholars report that in states that allow people to leave school before 18, a 10 percent increase in the state minimum wage caused teenage school enrollment to drop 2 percent.
The federal minimum wage has not been raised since 1997, so 29 states with 70 percent of the nation's workforce have set minimum wages between $6.15 and $7.93 an hour. Because aging liberals, clinging to the moral clarities of their youth, also have Sixties Nostalgia, they are suspicious of states' rights. But regarding minimum wages, many have become Brandeisians, invoking Justice Louis Brandeis's thought about states being laboratories of democracy.
Will doesn't mention the real driver behind this for some reason. The unions have an enormous stake in this because of the tie between many union contracts and the minimum wage. But as Will points out, this one is pretty much a done deal. It will take years for the damage to become apparent. But putting in price controls has always been a horrible idea that has inevitably backfired. So it is with price controls on the labor market.
By Quilly Mammoth, Thursday, 4 January , 2007 @ 7:54 am
Several years ago I read some reports from the Institute fro Research on Poverty which is a housed at University of Wisconsin-Madison. No Red State enclave there! The conclusion is that there is a limited benefit for those that will be _stuck_ in that wage class, that it is short term as it remains fixed as prices rise and finally that many of those who initially take advantage of minimum wage increases are _not_ those who depend on the wage increase to feed their family.
Here’s one weighty tome:
http://www.irp.wisc.edu/publications/dps/pdfs/dp121400.pdf
Flinn basically says that wage increases are localized to specific wage levels.
Many of the other reports included references to the fact that minimum wage increases no longer affect a wide segment of the work force.
So, indeed, who benefits most? If you build a man a fire he keeps warm for only a brief period…if you set him on fire it lasts a lifetime.
By Paladin, Thursday, 4 January , 2007 @ 2:18 pm
Truly, it’s a political move and not even close to benefitting our capitalistic country.