So you thought the country dodged a bullet last week when the minimum wage increase failed in the Senate? Silly you.
Federal lawmakers in this election year are acting like they’re doing voters a favor by passing an increase in the minimum wage. But instead of helping workers, an increase in the minimum wage hurts many of them.
Common sense and basic economics tell us that when you raise the price of something, fewer people will buy it. A government-mandated increase in the minimum wage raises the price of labor. And quite naturally the buyers of that labor — businesses — buy less of it, as demonstrated in study after study.
For instance in a 1997 paper for the National Bureau of Economic Research, David Neumark and William Wascher estimate that a minimum wage increase leads to an increase in the number of families that are officially poor by as much as 300,000.
Another NBER working paper in 1999 found that a minimum wage increase in France increased the risk of unemployment for people at the old minimum wage. In that paper, authors John M. Abowd, Francis Kramarz and David N. Margolis also found that a decrease in the real minimum wage leads to a higher probability of employment.
But there is a growing and more successful model working at the state and local levels trying to implement a “living wage,” a wage sufficient for a worker and possibly dependents to reach a basic standard of living.
The National Conference of State Legislatures noted last month that seven states were considering living wage legislation and Washington DC had already passed it this year.
Moreover, the liberal activist group ACORN notes that 140 communities have passed living wage legislation.
One of their most recent “successes” was in Chicago.
The City Council passed an ordinance that requires retailers with more than $1 billion in annual sales to pay a minimum wage of $10 an hour. The ordinance also requires such companies — can you say Wal-Mart? Target? — to pay an additional $3 per worker in fringe benefits by 2010.
Target immediately fired off a letter to Chicago Mayor Richard Daley saying that if he doesn’t veto the measure, Target would halt plans to build two new stores in the city.
Poof! Close to 200 jobs, gone, just like that. Call it another liberal “success.”
Of course, that just means more low-income people getting their money from the government instead of the private sector.
Oh, maybe that was the goal all along!