With Call For Minimum Wage Hike Obama Is Putting The Screws To Young Americans Again

PayneMinWage

Obamacare is turning out to be a swift, hard kick in the pants for America’s youth (a demographic that voted overwhelmingly to re-elect the President). Now, with his call during his State of the Union address for an increase in the minimum wage, President Obama is set to put the screws to younger Americans again.

Professor Mark Perry shows that, with the minimum wage increases that took place between 2007 and 2009, unemployment among young Americans increased:

minwage3-600x406

The jobless rate for 16-19 year olds increased by ten percentage points, from about 16% in 2007 to more than 26% in 2009. Of course, the overall US jobless rate was increasing at the same time, from about 5% to 10%. Therefore, the graph attempts to better isolate the effects of the minimum wage increases between 2007 and 2009 on teenagers by plotting the difference between the teenage jobless rate and the overall jobless rate, i.e. “excess teen unemployment,” and the minimum wage.

During the 2002-2007 period when the minimum wage was $5.15 per hour, teenage unemployment exceeded the national jobless rate by about 11% on average. Each of the three minimum wage increases was accompanied by a 2 percentage point increase in the amount that the teenage jobless rate exceeded the overall rate, from 11 to 13% after the 2007 increase from $5.15 to $5.85 per hour, from 13% to 15% following the second hike to $6.55 per hour, and from 15% to 17% following the last increase to $7.25. The 17.5% “excess teen unemployment” in October 2009 was the highest on record, going back to at least 1972, and was almost 5 percent higher than the peak teen jobless rate gap following the last recession (12.7% in June 2003).

When we increase the minimum wage, far from helping low-wage workers, we’re increasing the cost of employing them. In essence, the minimum wage is a tax on low-wage, unskilled labor.

“Raising the minimum wage by a substantial amount would price working poor people out of the job market,” wrote the New York Times in a 1987 editorial. They were right back then (they aren’t right now).

But, really, there just aren’t that many people making the minimum wage. According to the BLS, in 2012 there were just 3.8 million US workers making at or below the minimum wage. That’s out of 142.4 million total US workers. That means just 2.6% of US workers are making the minimum wage.

And of that total, half were under the age of 25 again according to the BLS (workers under 25 make up just 20% of total US hourly workers).

So if we raise the minimum wage, we’re not going to help the economy so much as create a bigger barrier between young, low-skill workers and gaining experience in entry-level jobs.

That doesn’t help. That hurts.

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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  • Rocky

    All very true, bit it falls on deaf ears. The left will continue to double down on bad economic policy. And the people keep re-electing the same politicians. It seems the cycle will only be broken by a cataclysmic economic event.

  • mickey_moussaoui

    I keep telling you this. Minimum wage is ALL ABOUT UNION PAY SCALE.

    Most union wage scales are built on Minimum Wage law. for example: If you are a union construction worker and you are paid 5 times minimum wage for what you do, then when minimum wage gets a raise by Democrats, you also get a raise times 5 ( or 6, 7 or whatever you make). so if you make 5 times minimum wage(as in this example) and if minimum wage goes up 50 cents, then you, the union worker, just got a $2.50 per hour times 5 raise. That comes down to a raise of $2.50 per hour. ……And who gets the money from the union dues? THE DEMOCRATS (and the union management).
    AND WHO PAYS THE MONEY? YOU THE CONSUMER!!!!!!!!!!!!!!
    Wake up people. The Democrats are phucking you in your stupor.
    It’s like having sex with a drunk. They wake up with a hangover and you got a freebee.

  • Yogibare

    It all makes sense as you think about it (like the Dem’s think).
    Hey young people: look at it this way: if you could get a job—Obama’s $9 per hour would get you some nice pay ! That is, if you could get a job. Which, of course, you can’t because Obama just priced you out of the market.
    Maybe you all should go to college and get an expensive degree—then you can be unemployed at a higher rate than minimum wage.
    It’s the Democrat / Liberal / Progressive way to redistribute wealth.

    • http://sayanythingblog.com Rob

      The minimum wage is a tax on young and know skill workers.

      • ellinas1

        Mark Perry wrote it, and Rob Port presents it as being true:

        “….the graph attempts to better isolate the effects of the minimum wage
        increases between 2007 and 2009 on teenagers by plotting the difference
        between the teenage jobless rate and the overall jobless rate, i.e.
        “excess teen unemployment,” and the minimum wage.”

        The unemployment rate went up for everybody during the time quoted, and it had nothing to do with the minimum wage.

        • JoeMN

          Context means everything

          Of course, the overall US jobless rate was increasing at the same
          time, from about 5% to 10%. Therefore, the graph attempts to better
          isolate the effects of the minimum wage increases between 2007 and 2009
          on teenagers by plotting the difference between the teenage jobless rate
          and the overall jobless rate, i.e. “excess teen unemployment,” and the
          minimum wage.

          • ellinas1

            If context means everything, to better isolate the effects of the minimum wage increases on teenagers why not compare teen unemployment between 2009 and 2013 where the overall unemployment either remains stable and or is slightly decreasing?

          • two_amber_lamps

            We certainly can isolate the effects of a sexual predator on the loose in the City of Stockton, CA… though pederasts are notoriously despicable, sniveling personages who often display histories of mental defect. Haven’t you turned yourself in for therapy/institutionalization yet Comrade Greekling?

          • ellinas1

            Happy New Year, harpy!

  • silverstreak

    Not to sound ignorant but I really don’t even know how much the minimum wage is.
    I do remember making it for about 90 days in 1974 when I got out of high school but that didnt last long.
    Most of my life I have worked on commission so I have more incentive to hustle if I want a good paycheck.

    • http://sayanythingblog.com Rob

      It’s $7.25/hour now, up $2.00 since 2007.

      • silverstreak

        Thanks Rob,
        I would hate to know that I was only worth $7.25/hr. to my employer and the only way I could get that was through coercion from a government official.

        • VocalYokel

          The Leftards will argue that your evil, greedy employer would not even pay you the minimum wage if it weren’t for the government’s benevolent concern for the poor exploited masses upon whose back these heartless corporations have built their empires.
          Your value as an employee apparently has nothing to do with your ability, self-motivation, education, or innovative abilities.

          We should all be thankful we have ‘them’ to watch out for ‘us.’

          • silverstreak

            They may try that but it wouldn’t fly.
            About 3 years ago my employer got into finiacial trouble and thought that he might have to close.
            I put my resume on the Internet and had numerous job offers.
            I then left my employer without notice but under good circumstances to take a week off to rest and decide where I wanted to go to work.
            During that week my employer figured out that he was going to be able to stay in business if he downsized.
            He called me and asked if I would come back to work for him for the same pay.
            As a matter of fact I’m still getting job offers 3 years later but I like what I’m doing.

  • ellinas1

    The minimum wage hike has more to do with inflation adjustment than giving a raise to the minimum wage earners.

    • JoeMN

      Some would argue that minimum wage hikes results in cost push inflation.

      This would be true only if these increases wouldn’t result in so much job loss

      There is a sporting goods manufacturer here that employs minimum wage workers (mostly for sewing). They hire mostly second income housewives/low skilled non English speaking workers.

      Alongside the federal increase, the Peoples Republic of Minnesota wants to raise the state minimum from $6.15 to $9.50/hr.
      It all works out great on the surface, a Democrat giveaway to about 500,000 Minnesotans.
      However, this manufacturer must compete against other brands for shelf space at Walmart.
      These other brands also employ non English speaking people……in East Asia

      • ellinas1

        JoeMN says: “These other brands also employ non English speaking people……in East Asia”

        Sure they do. And we will never be able to compete with Bangladesh, China, Malaysia etc, etc.

        • JoeMN

          Oh yes we can

          And it doesn’t require wages of .03 cents/hr to do it. thanks to technology, efficiencies, and especially Capitalism/ profit motive, ect

          Consider minimum wage as another tax, another burden piled on companies who must compete in the marketplace.

          Each tax increase, every new regulation is but another weight placed on their backs.
          The solution is becoming more clear by the day….you want more jobs ?
          Remove some weight

          Yet even in the most business friendly places, the effects can still be felt.

          http://hklawblog.com/2012/10/18/increasing-the-statutory-minimum-wage-to-30-per-hour-beneficial-or-harmful-to-the-hong-kong-community/
          Minimum wage law was sold to Hong Kong as an avenue “to reduce income inequality”
          This disease called class envy will eventually bring Hong Kong’s economy to it’s knees quicker than Chi Com meddling ever could.

          What it really comes down to, is the sacrificing of some, for the benefit of others.
          And in the case of minimum wage laws, the youngest, least skilled workers are sacrificed so liberals can feel good all over.

          • ellinas1

            “Oh yes we can
            And it doesn’t require wages of .03 cents/hr to do it. thanks to
            technology, efficiencies, and especially Capitalism/ profit motive, ect”

            Then let the technology, efficiencies, and especially Capitalism/ profit motive, etc” do the job.
            Human labor costs $$$.

            In the example you quoted, what wage you deem appropriate, which regulations are impeding that particular business and which ones would you remove?

          • JoeMN

            The appropriate wage is negotiated between the employer and the employee, not mandated by the government.

            As far as regulation, I used the example of Hong Kong specifically because it ranks first in economic freedom

            http://www.heritage.org/index/country/hongkong

            That even in the most free economy in the world, minimum wage laws can still have a negative effect.

            If you wish to argue that ALL regulation is necessary and proper, you may want to check with the white house first.

            http://content.usatoday.com/communities/theoval/post/2011/01/obama-to-review-regulations-and-cut-those-that-cost-jobs/1#.USOTeGeJ2S0

            (even though this will to cut regs most likely expired with the election)

          • ellinas1

            I ask you again: In the example you quoted, (sporting goods manufacturer here that employs minimum wage workers mostly for sewing), what wage you deem appropriate, which regulations are impeding that particular business and which ones would you remove?

          • JoeMN

            Here again

            The appropriate wage is negotiated between the employer and the employee, not mandated by the government.

            _________

            which regulations are impeding that particular business and which ones would you remove?

            What you don’t seem to understand is that one could go to two businesses in the same industry, and get two different answers to that same question. This is because often times regulations which increase costs to large business, actually provide a barrier from entry to a startup.

            Those larger business often lobby in favor of this regulation
            http://www.creators.com/opinion/john-stossel/blocking-the-paths-out-of-poverty.html
            “What we did back then is we got all the groups together and we came
            with an ordinance that was satisfactory to all of the parties at the
            time.”

            But they couldn’t have gotten “all the groups” together because
            people who hadn’t yet entered the business weren’t included. How could
            they have been? No one knew who they would be. What the mayor did was get the established guys together. Such “fairness” regulation kills job growth and reduces consumer welfare because the entrenched interests write rules that cripple new competition.

            ______

            Removing specific rules that were written with the “consent” of this particular business likely won’t help it.

            But how does one measure the damage regulation can do by stifling competition ?

            THIS is where we begin to scrutinize regulation.

            Many times a business will explain how it’s insurance bases it’s premiums on it’s workplace/equipment design.

            These premium increases often provide the incentive to make changes.
            Plus there is the threat of lawsuit.

            Then OSHA walks in, demanding something totally different, based on one accident somewhere else.

            An example here is a local grain elevator which used a power grain sweep to clean out it’s small bins.

            An OSHA rep looked at the sweep with it’s partial shield, and demanded a FULL shield around the auger.

            This would have rendered the auger useless, thus requiring employees to risk back injury removing the grain by hand.

            Then there are overarching regs which affect all

            One is the minimum wage hike I mentioned.

            Others can include Minnesota’s 20/20 green energy initiative, jacking commercial electricity rates.

            Another is the foot dragging on clean coal plant approvals.
            Then there are indirect regs affecting the costs of materials they use.
            However, I do realize (being a liberal) you are trained to screech for MORE rules, MORE regulation MORE tax as though the quality of our lives can be measured directly by how firm of hold government has around our throats.

          • ellinas1

            JoeMN says: “The appropriate wage is negotiated between the employer and the employee, not mandated by the government.”

            Surely you are jesting.This business, the sporting goods manufacturer you mention, offers minimum wage, employs minimum wage workers mostly for sewing and hires mostly second income housewives/low skilled non English speaking workers.
            Are you , with a straight face, going to tell me that a prospective employee can go to this business and negotiate wages?

          • JoeMN

            Why do you assume without a minimum wage, business owners would lie in wait, club passers bye in the head, and drag them in to be their slaves ?

            Oh wait, that’s basically how unions operate.

            Libs here are now calling for the minimum wage to be tied to inflation.

            Where does this put an already struggling company. ?

            Is there any “justice” in bankruptcy ?

            All wages (over the imposed minimum) are inevitably set by the marketplace

            Those employees conditions are not static. They gain work experience, move up, or move on, all without government intervention

            The unskilled potential employee has other choices as well. He can gain skills, or try elsewhere.

            Of course the imposed minimum wage limits his opportunities.

            http://mises.org/daily/6121/The-Effect-of-WageRate-Interventions
            I understand that Argentina has a minimum wage law similar to ours in
            the United States. They tell the story in my country about a man who is
            running a small business. The inspector from the Minimum Wage Office in
            Washington comes out and asks him about his three employees. The
            inspector wants to know how much he pays them, the hours they work, and
            what they do. He examines closely the books of the little firm, checking
            to find out if the wages paid are above the minimum specified by law.
            Then he asks: “Is there anyone around here who gets less than the
            minimum wage?” The businessman answers: “Yes! There is.” The inspector,
            all alert, says: “Let me speak to him.” The owner of the business
            replies: “You are talking to him now. I work for my keep and very little more.”

            This touches on the problem that we are discussing, for small business
            owners who cannot make as much as their employees will soon stop hiring
            workers and start competing as employees.

          • two_amber_lamps

            Why do you assume without a minimum wage, business owners would lie in
            wait, club passers bye in the head, and drag them in to be their slaves ?

            Alas Joe, you’re assuming logic an reason… and you are fallaciously ascribing the same attributes to ellinas1 (admitted pederast).

            Ellinasty is simply using logical fallacy to attack your argument, that of the strawman. He tries to exaggerate your argument (ie make a straw man of it) so that he can more easily defeat it… or at least defeat it in his mind and that of those sharing his weak (typically libtard) intellect.

            I wouldn’t lose too much sleep over converting lil’ Elli to your brand of thought. Keep him away from your children too.

          • ellinas1

            Happy New Year harpy.

          • ellinas1

            I don’t assume anything of the sort.
            You are projecting.

            I am going to ask you again, and I am awaiting for a straightforward answer.
            You said: “The appropriate wage is negotiated between the employer and the employee, not mandated by the government.”

            This business, the sporting goods manufacturer you mention, offers
            minimum wage, employs minimum wage workers mostly for sewing and hires mostly second income housewives/low skilled non English speaking workers.
            Are you , with a straight face, going to tell me that a prospective employee can go to this business and negotiate wages?

          • ellinas1

            I don’t want a lecture, nor do I want a link to to an opinion page.

            However, I will comment on this: “In Hialeah, Fla., if you operate a flower stand too close to a flower
            store or if you’re not constantly moving, you can be arrested.

            Suppose JoeMN has this flower store and pays $2000 per month in rent and utilities. Suppose ellinas1 sets up shop in the street about 15 feet from your front door and sells pretty much the same stuff you do but at half the price, and is detrimental to your business.

            Are you then for regulating the flower street vendors, or are you for the free market competition and the street vendors that Stossel advocates for?

          • two_amber_lamps

            Your business wouldn’t last 15 minutes since you couldn’t keep your boy-@$$-buggering hands off the clientele, silly child rapist.

          • JoeMN

            Why is it for the government to decide what’s “fair”
            Don’t forget, somebody is benefiting from the competition…….consumers.

            Especially those low skilled workers discussed.

            In fact, the government contributes to this unfairness.
            One potential way is through sewer and water upgrade levy’s which severely financially burdens the few business owners, to the benefit of those homeowners who vote

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