The Minimum Wage

Point 1: The Minimum Wage increases teenage unemployment. "Two years ago Mr. Neumark and William Wascher, a Federal Reserve economist, reviewed more than 100 academic studies on the impact of the minimum wage. They found "overwhelming" evidence that the least skilled and the young suffer a loss of employment when the minimum wage is increased."[1] As the minimum wage increases, so does teenage unemployment. "70-cent-an-hour increase in the minimum wage would cost some 300,000 jobs. Sure enough, the mandated increase to $7.25 took effect in July, and right on cue the August and September jobless numbers confirm the rapid disappearance of jobs for teenagers."[1] "Unemployment in 2006 (teenage) was 4.4%, there was a steady minimum wage. In 2009, after a few minimum wage increases, teenage unemployment was 10.2%."[2] [2] "A 2006 University of Georgia study found that every 10 percent increase in the minimum wage was associated with a 4.6 to 9.0 percent decline in teenage employment. This finding was corroborated last summer when the 12 percent hike in the minimum wage corresponded with a five percent unemployment spike for teens."[3] "1995 Michigan State University study showed a higher minimum wage was found to increase the number of idle teens, those who neither work nor attend school by as much as 20 percent."[3] As the minimum wage increases, teenage employment decreases. Why? Because as the minimum wage eats into companies' profits, they can employ fewer people. And the first people they fire are the unskilled, young employees. Point 2: The Minimum Wage increase minority unemployment. "Minimum wage laws effect ethnic minorities the most."[4] "As the minimum wage effects the least productive, minorities are more likely to be effected by these laws. It also effects poor areas most, which are full of miborities, therefore affecting them."[5] "Hardest hit of all: black male teens, whose unemployment rate shot up to a catastrophic 50.4%. It was merely a terrible 39.2% in July."[1] So the minimum wage hurts minority teens worst. Point 3: The Minimum Wage increases overall unemployment. "Economists have studied the job-destroying features of a higher minimum wage. Estimates of the job losses of raising the minimum wage from $4.25 to $5.15 have ranged from 625,000 to 1,000,000 lost jobs. It is important to recognize that the jobs lost are mainly entry-level jobs. By destroying entry-level jobs, a higher minimum wage harms the lifetime earnings prospects of low-skilled workers. "[6] "Only 1 study has reversed 300 years of min wage research, other economists tried to duplicate this study, but couldn't, all other studies indicated minimum wages increase unemployment."[7] [8] "With all of this recessions significant labor market problems, and the expensive federal efforts to offset them, its too bad that the minimum-wage law added so many people to the list of those who today cannot find jobs."[9] As the minimum wage increases, unemployment increases. Why? Because with a minimum wage, companies have to pay more to employees. This means that they have to lay off employees to stay on budget. Point 4: The Minumum Wage causes an increase in prices. "The federal increase from $4.25 to $5.15 costs California families an average of $133 more per year for the goods they normally purchase. Since higher-income families spend more, they would pay more in absolute terms than lower-income families: up to $234 per year compared to $84 per year."[10] "In a series of studies over the last four years, Aaronson and French show that a 10 percent hike in the minimum wage increased restaurant prices on the whole by 0.7 percent, and prices at limited service establishments by 1.6 percent."[11] As the minimum wage increases, not only do companies fire employees, they also raise prices to help the budget. And in the end, this will make it harderfor people, especially poor people, to buynecessary things. That in turn reduces GDP growth because there is less buying, and know, this will plungeus into another recession. Point 5: The Minimum Wage causes more high school dropouts. "One rarely talked about idea is that the minimum wage causes more highschool drop outs."[12] Why does this matter? Well with a more less educated population, that is fewer people that can take high-status jobs. This creates a shortage of high-profile jobs and a surplus of low-profile jobs. In other words, there will be a long-term increase inunemployment due to this. Point 6: More arguments against the minimum wage. "First, raising the minimum wage would not reduce poverty.[13] "Second, current evidence, see graph, shows when the minimum wage goes up so does unemployment."[8] "An increase in the minimum wage to $5.15 an hour, as President Clinton proposes, would drive teenagers with few skills out of the workplace and out of the schools, say members of the African-American leadership group Project 21."[14] "In china you pay less ------> less cost to you ---> $$$$ Vs the minimum wage Higher wages ---> expensive ---> move to china!""When you force American companies to pay a certain wage, you increase the likelihood that those companies will outsource jobs to foreign workers, where labor is much cheaper. There has been a lot of attention lately on the subject of job "outsourcing", where U.S. companies hire foreign workers instead of Americans. When businesses outsource American jobs, they're not doing it because they hate America; they're doing it because they're trying to cut costs. When you increase the price of labor in America, you create an additional incentive for businesses to hire Canadian, Mexican, or other foreign workers. The best way to stop outsourcing of jobs is to provide the best conditions for doing business in America. A minimum wage just makes things tougher for companies to do business in America. Remember that American companies may have no choice but to outsource with the high cost in the U.S.--they may go out of business entirely if they can't cut costs to a level that's competitive with foreign competitors."[15] Sources: [1]: http://online.wsj.com... [2]: http://www.americanthinker.com... [3]: http://epionline.org... [4]: http://mises.org... [5]: http://hispanicpundit.com... [6]: http://www.house.gov... [7]:David andWilliam Wascher, The Effect of New Jersey's Minimum Wage Increase on Fast-food Employment: A Re-evaluation using Payroll Records. National Bureau of Economic Research: Cambridge, MA, 1995. [8]: http://www.foxbusiness.com... [9]: http://economix.blogs.nytimes.com... [10]: http://www.ppic.org... [11]: http://epionline.org... [12]: http://www.heritage.org...research/reports/2006/07/raising-the-minimum-wage-hurts-vulnerable-workers-job-prospects-without-reducing-poverty [13]: http://www.cnn.com... [14]: http://www.nationalcenter.org... [15]: http://www.balancedpolitics.org...