Raising The Minimum Wage Hurts Young And Low-Skill Workers

minimum wage cartoon2

In the Wall Street Journal, George Mason University economists Don Boudreaux and Walter Williams argue that New Jersey’s decision to raise the minimum wage to help young and low-skill workers will actually have the opposite effect:

The evidence is overwhelming that minimum-wage legislation has a negative effect on the employment of low-skilled workers. As a careful empirical study done in 2000 by Cornell University economist Richard Burkhauser and some co-authors concluded: “Minimum wage increases significantly reduce the employment of the most vulnerable groups in the working-age population—young adults without a high-school diploma (aged 20-24), young black adults and teenagers (aged 16-24), and teenagers (aged 16-19).”

Even the loudly and proudly progressive economist Paul Krugman—who called the Card-Krueger result “iffy”—has admitted that raising the minimum wage likely reduces employment prospects for low-skilled workers.

If minimum-wage legislation only destroyed jobs for teenagers, it would be bad enough. But its long-term consequences are more dire. Precisely because the climb to higher wages begins for most workers during their teenage years with entry-level jobs, the minimum wage—by knocking off the bottom rungs of the economic ladder—effectively tells young workers: Unless you can jump immediately to higher rungs on the ladder, you must remain unskilled and unemployed for the indefinite future.

There’s another aspect here worth mentioning. If you inflate the price of labor, you inflate the costs of goods and services provided by that labor. When the government mandates higher wages, they also mandate higher prices. So not only does a higher minimum wage mean less employment for low-wage workers, it also means a higher cost of living for everyone.

The government shouldn’t be in the business of price fixing, be it fixing the price of milk and bread or fixing the price of labor.

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Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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