Minimum Wage Should be Abolished
Featured / March 28, 2017
Calvin Boghart, Contributor
The first minimum wage was imposed back in 1938 and set at a modest sum of 25-cents an hour. Many workers have lost their jobs since then because of this misguided policy. Its unintended consequences have been well-documented for nearly 80 years.
For instance, Economists David Neumark and William Wascher reviewed more than 100 minimum wage studies in 2006 and concluded that about two-thirds found negative employment effects. Four years later, Joseph Sabia and Richard Burkhauser estimated that, “nearly 1.3 million jobs will be lost if the federal minimum wage is increased to $9.50 per hour.”
A minimum wage can not only cost the average worker their job, but also, it is especially harmful to low-skilled workers. The review by Neumark and Wascher from 2006 found that “minimum wages reduce employment among low-skilled workers.”
Michael J. Hicks, professor of Economics at Ball State University, established that, “the latest round of minimum wage increases [account] for roughly 550,000 fewer part-time jobs,” including “roughly 310,000 fewer teenagers working part-time,” and a 2012 analysis of the New York State minimum wage increase found a “20.2 to 21.8 per cent reduction in the employment of younger less-educated individuals.”
In the previous federal minimum wage increase from $5.15 to $7.25, only 15 per cent of the workers who were expected to gain from it lived in poor households, according to a 2012 review by Mark Wilson. If the minimum were raised today, only 11 per cent of workers who would gain from it live in households that are considered poor.
Mark Wilson’s review also found that a 2004 “review of more than 20 minimum wage studies looking at price effects found that a 10 per cent increase in the U.S. minimum wage raises food prices by up to 4 percent.” The Federal Reserve Bank of Chicago conducted a study in 2007 that found that restaurant prices increase along with minimum wage increases.
The evidence is overwhelming. A minimum wage has many unintended consequences. It decreases employment, hurts low-skilled workers, doesn’t reduce poverty, and increases prices. But, as the old saying goes, “the road to hell is paved with good intentions.”