Saturday, September 3, 2011

Minimum wage and unemployment

I spent more than a year of my life working at a grocery store in a bad neighborhood, making less than $2.00 per hour, but it was, at the time, the "minimum wage."  As of today, the minimum wage in Texas is $7.25 per hour.  My present curiousity, given high unemployment (especially among teens, and most pointedly among black teens), is whether reducing--or, better yet, eliminating--the minimum wage would (i) reduce unemployment and (ii) provide persons now unemployed with an opportunity to start working, and thereby gaining experience that will assist them in getting better jobs in the future.

I am aware that many studies have shown that increases in the minimum wage increase unemployment, especially among teens.  I am also aware of studies that are critical of those studies, arguing that increases in minimum wage have no measurable impact on employment.

But, I am certain that increases in the minimum wage must hurt employment.  Consider this example:  suppose we increase the minimum wage to $100/hour?  Would anyone claim that such an increase would not have an adverse impact on employment?  In fact, I have always wanted a congressman to pose such a hypothetical to someone testifying in favor of higher minimum wages.  For example: if a $1/hr increase is good, would a $25/hr increase be even better?  If not, why not?

If you agree that it dramatically higher minimum wages would adversely affect emploment, then you have agreed with the trend; i.e., as the minimum wage increases, unemployment must necessarily increase.

Why, then, does no one ever propose--in the face of high and persistent unemployment--a decrease in the minimum wage?

Father

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