From: jwh@citi.umich.edu (Jim Howe)
Subject: Re: Minimum wage: balancing job losses vs pay increases
Date: Tue, 28 Jul 92 11:12:39 EDT
Organization: IFS Project, University of Michigan
Reply-To: jwh@citi.umich.edu

In article <hellmann.712258228@oak.cs.scarolina.edu>, hellmann@cs.scarolina.edu (Douglas R Hellmann) writes:
|> kenr@orleans.storage.tandem.com (Ken Rose) writes:
|> 
|> >Well, lets not gloss over the loss of entry level jobs & opportunity.
|> 
|> >According to the Congressional Budget Office, hiking the minimum
|> >wage to $5.05 an hour "could cause the loss of approximately 250,000
|> >to 500,000 jobs ... especially among teen-agers" (quoted in the
|> >San Jose Mercury News, May 5, 1988).  The Mercury article goes on to
|> >say that "President Carter's Minimum Wage Study Commission concluded
|> >in 1981 that each 10 percent increase in the minimum wage cuts
|> >teen employment by 1 to 3 percent, as the least-skilledc workers are
|> >priced out of entry level jobs.  By that analysis, hiking the
|> >minimum wage to $5.05 would cost 325,000 to 975,000 teenage jobs".
|> 
|> I thought that this was found to be false recently.  They just raised
|> the the minimum wage to something over $4 (I think) and the job loss
|> rate didn't follow it anywhere as closely as they thought it would.
|> 

There was a report issued recently which purported to show that
raising the minimum wage didn't have the bad effects most people
claim.  However, this report is widely disputed.  There was a good
analysis of the report in the Wall Street Journal in the last month
or so which throughly trashed the assumptions and conclusions.  In
a nutshell, the conclusions were not supported by the data presented
in the report.

|> >And lets not assume that "most" Americans are forced into working
|> >for minimum wage. "Only 3.4 percent of the American work force
|> >now hold jobs that pay the minimum wage or less" (from Newsweek,
|> >April 17, 1989).  "And of those 3.9 million person, some 80 percent
|> >are second- or third- wage earners in statistically unpoor 
|> >households."
|> 
|> Why is it so important for all these teenagers to have jobs?  I mean,
|> not that I don't want them too, but why is it so important?  

Teenagers who have jobs develop skills which will help them get better
paying jobs in the future.  Simple things, like responsibility.  It
also keeps them off the street.

|> The people
|> we should be worried about are the adults who are trying to feed their
|> families.  What percent of the people working for minimum wage are in
|> this group?
|> 

From the information given above it would seem that 20% or less fall
into that category.

|> >Given that one of the main causes attributed to the LA riots is
|> >pent-up frustration at lack of opportunity, and that starting at
|> >a minimum wage job allows unskilled workers to begin to climb the
|> >economic ladder, I wonder just how much effect pricing teenagers
|> >out of the job market has in creating the type of frustration
|> >that led to the riots. 
|> 
|> Maybe there could be two minimum wages?  One for these kids that don't
|> have real skill or experience, and one for the people that need the
|> money and are somewhat skilled and experienced?
|> 

Why must we use the wage system to provide charity?  Wages don't
discriminate between those who 'need' a higher wage and those
who don't.  Attacking poverty in this manner is like disecting a
fly with a chainsaw.  If we are going to have a system which helps
out the poor it should be done in an efficient manner.  Private
charity should be the first line of defense.  If there is to be
a national public 'charity' program (i.e. welfare) it should be
done through the tax system via a negative income tax.  Those who
are 'needy' will be able to get tax refunds while those who are
not will either pay no tax, or pay an appropriate tax on the amount
earned.  Minimum wage laws simply distort the economy, and hurt unskilled
workers.  They should be abolished.



James W. Howe                  internet: jwh@citi.umich.edu
University of Michigan             uucp: uunet!mailrus!citi.umich.edu!jwh
Ann Arbor, MI   48103-4943         
Newsgroups: alt.politics.clinton,talk.politics.guns,talk.abortion