Minimum wage increase: will it protect or harm?
By Daily Bruin Staff
Jan. 31, 1995 9:00 p.m.
Minimum wage increase: will it protect or harm?
Is the State of the Union Address over yet? I thought it might
never end, but then I guess any President who sees his relevance to
America’s future diminishing daily would probably want to linger
on, clinging onto the bully pulpit as long as possible .
Something else the Lame-Duck-in-Chief wants to cling to is his
image as a "progressive" politician. Aside from returning to
campaign planks which fell off the agenda under the
Democrat-controlled Congress, the only substantial issue the
President touched upon in his speech was the minimum wage, a
longtime standard of progressive, feel-good politics.
Increasing the minimum wage, however, like most of the mushy
ideas propounded by self-described progressives, is a bad idea. The
argument for increasing the minimum wage, thus protecting the
buying power of wage-earners, is appealing, but many of the people
intended to benefit from the increase would actually be hurt by
it.
The truth is that the vast majority of wage-earners would not be
directly affected by an increase in the minimum wage. Of those who
are affected, certainly some will appreciate the increase in
income, but for every 10 percent increase in the minimum wage,
there is a 1 to 3 percent increase in unemployment.
The reason unemployment goes up is that employers simply cannot
afford to pay over a certain amount for many jobs. Remember, the
wage paid to the employee is but one of many costs associated with
employing another worker. Businesses must pay for worker’s
compensation insurance, social security taxes, as well as for
enough training and capital to ensure that the worker’s efforts are
productive and for many other things, all in addition to the actual
wage paid.
When the government artificially increases the cost of hiring or
keeping an additional employee, either by increasing the wage or
imposing new regulatory mandates, then it may no longer be
profitable to hire or keep that employee. Increasing the minimum
wage may be intended for beneficent purposes, increasing purchasing
power for workers at the bottom of the ladder, but unemployment is
an ever-present side effect.
That may be a worthwhile trade-off  certainly Bill Clinton
thinks so  but perhaps we should examine exactly who is most
affected by such employment legislation. Who really bears the
burden of increased unemployment?
One group which would be hurt is young people. Young people
generally have less work experience, require more training, often
work only part-time and tend to occupy positions with high turnover
rates. They tend to be less productive employees per dollar of
wages than their older, more experienced, more tenured
co-workers.
Young people have historically been the voiceless victims of
progressive legislation. FDR’s National Industrial Recovery Act,
the legislation which first instituted the American minimum wage,
also instituted a ban on jobs for youth.
Under an increased minimum wage, many young people will be
forced out of their employment or prevented from entering the
workforce. They will not be able to get the training, skills, and
experience that they would otherwise get if they could be employed
at a lower wage.
Some countries, notably Germany, have recognized this problem
with the minimum wage, and allow young people to be employed at a
sub-minimum wage, normally about two-thirds of the regular minimum
wage, while they receive on-the-job training and gain experience
working. Bill Clinton includes no such provision in his proposal to
increase the minimum wage.
Another group historically disadvantaged by the minimum wage has
been African Americans. After the NRA was instituted, with its new
minimum wage, approximately half a million blacks became unemployed
in the South. In fact, many of those lobbying for the first minimum
wage were white trade unionists and Southerners who complained that
blacks were willing to work for lower wages. Setting a minimum wage
eliminated the competition.
Today, there is another group which will likely feel much of the
negative impact of an increased minimum wage: immigrants. Like
young people, immigrants frequently lack the skills, experience and
work habits which American businesses are seeking. Many immigrants
often also face the added barrier of not being able to speak
English. Many opportunities for immigrants to take the first step
into employment and toward the American Dream will disappear if the
minimum wage is increased.
What Bill Clinton and other "progressives" present as their
concern for workers with low incomes is only a mask for their real
feelings, a terrible fear of self-determination for others.
Their greatest fear is that people, acting by their own will
toward their own interests, will not do precisely what they, the
progressives, want. In the 1930s the "progressives" resented that
young people and African Americans sought to work for their own
advancement.
When progressives try to identify themselves with working
people, they betray their true desire to have working people and
society as a whole conform to their own leftist-elitist view of
society: progressive politicians at the top of the social-political
hierarchy with millions of people trapped in dependency.
The American people more and more understand that progressives
want to replace individual autonomy with state intervention, and
the American people don’t like that. They voted against the
progressives last fall, and no matter how much Bill Clinton tries
to cling onto his presidency or drone on in his speeches, the end
approaches quickly.
Mahon is a senior majoring in political science. His columns
appear on alternate Wednesdays.
