Minimize It

We’ve all heard the term “minimum-wage” being thrown around. Whether it’s in labor union disputes or Congressional hearings, or even in school, the battle of minimum wage has always been a part of our conversations and debates. Last week, an op-ed asserted that an increase in the federal minimum wage would be better for America. However, it is both morally and economically beneficial to put a stop to any federal minimum wage increases.There are many studies that have examined the effects of minimum wage on employment. Time-series studies from a review of economic literature found that "a 10 percent increase in the minimum wage reduces teenage employment by one to three percent." This is a significant statistic because according to the Bureau of Labor statistics, 49 percent of minimum wage workers were 16-24 years old. To put this study into perspective, President Obama’s recent proposal of a minimum wage increase from 7.25-10.10 would be an almost 40 percent increase, thereby reducing youth employment by anywhere from 4-12 percent. In a time of weak economic recovery and a fair amount of cyclical unemployment, it is unfair to hit the most vulnerable young and low-income citizens with employment reduction.Of course there are other studies that ‘show’ how a minimum wage increase is beneficial, such as those by the liberal Economic Policy Institute (which is both chaired and funded by no less than 10 various labor union bosses,) but the studies neglect to show some historic examples of sudden minimum wage increases. In 1938, the first imposition of the minimum wage affected the lower-income U.S. territory of Puerto Rico. An estimated 120,000 workers in Puerto Rico lost their jobs within the first year of implementation of the new 25-cent minimum wage, and the island's unemployment rate soared to nearly 50 percent.More recently in the American Somoa, the minimum wage hikes in 2009 and 2011 imposed by the federal government wreaked economic havoc on the Samoa’s lower labor market. The minimum wage had such an adverse affect on the economy that Governor Togiola Tulafono testified before Congress to halt wage increases, saying, "We are watching our economy burn down. We know what to do to stop it. We need to bring the aggressive wage costs decreed by the Federal Government under control... Our job market is being torched. Our businesses are being depressed. Our hope for growth has been driven away." To the dismay of many minimum wage advocates, minimum wage increases have been found to hurt lower income communities and states more.Some advocates of the minimum wage have argued that with wage hikes, employers will suddenly become more efficient with finances and simply pay their workers more with only a small increase in prices. When employers are faced with forced wage hikes on low skill jobs with low necessity, they are forced to lay off some workers, reduce positions to part-time and increase prices. Naturally, the hourly wages of some workers will increase, but many more will lose their jobs. When workers lose their jobs, they will file for short-term unemployment and eventually long term unemployment and even welfare. Sometimes, if wage hikes are instituted, existing businesses will struggle to stay afloat or close and prospective business owners (that rely on low skill workers) will not wish to invest their funds. In the end, the American taxpayer, small businessman and the low-income worker are all hurt by the wage-hikes instituted by the Federal Government.Lowering the minimum wage, on the other hand, allows employers to treat low-skill jobs as any other jobs, so that they can hire as many workers as needed for the wage that matches the skill level of each job. Allowing employers to have lower wages would allow more job openings and flexible hours for workers. Shouldn’t the government be concerned with making sure all American citizens can be dignified that they are able to work instead of receiving welfare or unemployment checks? If the government wants to revive small business, speed up a sluggish economic recovery, put unemployed Americans back on their feet, and subsequently have a large tax revenue, it would do well to lower and even eliminate the federal minimum wage.