The New Years’ resolution of the Democrat Party was to gear up for the bloody midterm brawl, and the weapon of choice this year is the issue of income inequality. On its face, this is a good choice; after all, Republicans have struggled enormously over the past fifty years to define themselves as the compassionate party and still have not succeeded in doing so, and I would be surprised if they manage to put together a sound, succinct, and sensical argument against the minimum wage.
The minimum wage is a form of social policy that is nearly impossible to stop. The average person considers employees at McDonalds, Burger King, and Walmart employees and thinks to himself how great it would be for these low-skilled laborers to get paid a better wage. By this logic, a law raising the minimum wage would be enormously helpful to these people and their families.
The non-partisan Congressional Budget Office released a report this week detailing the effects of a minimum wage increase on the US economy, and it depicts results that are the exact opposite of what Democrats have predicted vociferously across the airwaves for weeks. The idyllic minimum wage helps the poor get back on their feet; but according to the CBO, only 19% of the employees who would benefit from an increased minimum wage live below the poverty line, while the people who would benefit the most (roughly 30%) have incomes three times the poverty line. What’s more, whatever positive effect a minimum wage increase might have for the poor will be reversed by staggering job losses, as firms employing minimum wage workers cut employees to avoid shouldering the billions of additional labor costs such a measure involves. The CBO’s midrange estimate of job losses is 500,000, but I would not be surprised if that number ended up being higher in the end.
So as nice as a minimum wage may sound, it fails to accomplish its basic purpose and cripples the futures of new laborers. According to the Bureau of Labor Statistics, 23% of employed teenagers paid by the hour “earned the minimum wage or less,” while only 3% of workers older than 25 claimed the same wage. Minimum wage jobs constitute a minute slice of actual employment, as evidenced by these statistics, but they help young people get their foot in the door of the labor market. It takes a significant amount of time, money, and training to prepare someone for a job, even if it is as simple as flipping burgers at a local McDonalds, and having to pay a high school student ten or twenty dollars an hour to do such a job makes hiring such a person an enormous inconvenience, if not a burden. A high minimum wage reduces the incentive of employers to hire inexperienced workers and therefore serves as an obstacle to the success of the next generation in the workplace.
Taken in the context of the weak US economy, raising the minimum wage is the wrong move at the wrong time. Minimum wage jobs are a transition to bigger and better employment, not a route to starvation, and we need to give more young people the opportunity to begin making their own ways in the world. The young in America deserve a chance to make their own way and to live on their own. If President Obama and the Democrats truly desire income equality, they should lower the minimum wage to help bring young people into the labor force to drive the economy at large.