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Minimum wage: here we go again.

Posted By Paul Gleiser On February 14, 2013 @ 4:46 pm In Featured Articles,Fox 51 Primetime | 4 Comments

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Here we go again. In his State of the Union address President Obama put forth an entire list of things he wants Congress to approve, one of which is to raise the federal minimum wage to $9.00 per hour from its present $7.25. Said the president,

“Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. This single step would raise the incomes of millions of working families.”

Minimum wage is a Democrat favorite that adheres to the maxim that the more wrong an idea is, the more that Democrats will cling to it. An uncritical media will let stand the president’s assertion that raising the minimum wage “would raise the incomes of millions of working families,” when, in the aggregate, it will do just the opposite.

In support of his position the president said that since the federal minimum wage was last raised, “nineteen states have chosen to bump theirs even higher.”

What the president didn’t tell you, however, is that of the top 10 states with the lowest unemployment rates in the country, only one, Vermont, has a state minimum wage that is higher than the federal minimum wage. He also failed to tell you that according to the Bureau of Labor Statistics, of the top 10 metropolitan areas with the highest unemployment rates, nine of them are in California – a state with an $8.00 per hour minimum wage that will likely be raised if the federal minimum wage is raised.

It’s this simple. States that have no minimum wage law, or that set state minimum wage equal to the federal minimum wage, in the aggregate have lower unemployment rates than states with minimum wages higher than the federal minimum.

The whole idea of a minimum wage decreed by government is a bad one – for a long list of reasons. Here are just a few.

One. Politicians can set the minimum wage at whatever amount they choose. What they cannot do is legislate the money to pay that wage. Money to pay wages comes from the employer and if the employer doesn’t have it, or decides that the work is not worth it, workers get laid off and hiring stops.

Two. Most who earn minimum wage are young employees in entry level jobs. These workers have the least experience and thus the least to offer an employer. A young worker being paid minimum wage is, in effect, forfeiting cash compensation in return for the economic benefit of being afforded an opportunity to gain experience and skills that will one day command a higher rate of pay. Raising minimum wage deprives such workers of that opportunity.

Three. The Congress cannot simply decide what an hour’s worth of your time is worth to you or what an hour’s worth of your labor is worth to an employer. From the perspective of your potential employer it depends on how much he can charge for the work you do and from your perspective it depends on if someone else is willing to pay you more.

Decreeing that wiping down cars at the car wash is worth $9.00 per hour doesn’t make it so. The car wash owner may be obligated to pay the wage but the car owner is under no obligation to pay the resulting price for getting his car washed. At some price it’s worth it to wash the car oneself which means that at some wage level, it’s not worth it for the car wash owner to hire workers.

Four. If you have reached the age in life at which people ordinarily have children, buy houses and raise families and yet you command only minimum wage for your skills, experience and education, no law can help you. Your problem is that you’re not offering a prospective employer enough economic benefit to make it worth paying you a higher wage. Your problem is you and only you can fix you.

There. Four arguments against minimum wage. There are so many more.

The president’s proposal to raise the minimum wage isn’t policy. It’s pandering – something that a country drowning in debt with a sputtering economy can ill afford.


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