It is a bad policy hiding behind a compassionate sound bite. A centrally planned economy is not the American way, yet Congress seems convinced that its centrally planned approach will solve the problem of poverty. Today s economy is doing well, but that does not mean the fundamental rules by which it operates have changed. The correlation between minimum wage hikes and job losses is one of the few things nearly all economists can agree upon. It is simple.
Labor is an expense, and when the price of labor goes up, employers use less of it.
Those at the bottom of the pay scale i.e., those with the fewest skills, are usually the first to be laid off and will have the hardest time finding a new job. In today s economy, the jobs lost from this minimum wage increase may not make a difference to nationwide unemployment figures, but it could, ironically, devastate the poorer communities Congress wants to help. A centrally planned economy is not the American way. Yet Congress seems convinced that its centrally planned approach to the labor market will solve the problem of poverty. It is true that the national unemployment rate is at its lowest level in decades, but a recent report found 273 counties and cities across the nation currently experiencing unemployment rates of nine percent or more.