Liberals Trying to Wreck Economy with Minimum Wage Hike

fast-food-worker75-percentAdvocates of a higher minimum wage are campaigning for new federal regulations designed to apply to large classes of workers. The Left is touting a minimum wage increase as the answer to the economic woes of American families. In his State of the Union address, President Obama called for a minimum wage of $10.10/hour. A union representing fast food workers is seeking $15/hour. As usual, Liberals are offering a simplistic answer to a much more complex problem.
Conservatives oppose this kind of economic engineering, for a number of reasons. Given an opportunity, the free market will adjust to accommodate the needs of both workers and businesses. Many entry-level, low-skill level jobs are already commanding higher than minimum wage.
A one-size-fits-all approach makes no sense. Why should companies in Texas or Mississippi have to pay the same wages as companies in New York or California?Operating costs and cost of living both vary widely from state to state. In recognition of these factors, twenty states as well as the District of Columbia have already raised their minimum wage above the amount required under existing federal law.
A study by economists Joseph J. Sabia and Richard V. Burkhauser and cited by David Henderson failed to demonstrate a correlation between a higher minimum wage and reduced rates of poverty. Probable factors are that 63.2 percent of minimum wage workers are second or third earners in households whose income is twice the poverty level, and 42.3 percent are second or third earners in households with incomes at least three times the poverty level.
Increases in the minimum wage would raise the cost of goods and services for all Americans, adversely impacting low earners as well as high earners. A model developed by the Heritage Foundation demonstrates that a typical fast-food “restaurant has a profit margin of just 3 percent before taxes. That works out to approximately $27,000 a year – less than the annual cost of hiring one full-time employee at $15 an hour. In order to raise wages, fast-food restaurants must raise prices.”
Because of the additional stress on businesses, a rise in the federal minimum wage would actually cost the economy jobs. The nonpartisan Congressional Budget Office has estimated that the Obama proposal “would reduce totalemployment by about 500,000 workers.”
Finally, it is important to consider the psychology of “entry level jobs.” These jobs are useful to young workers new to the job market, learning about the work ethic and getting along with people. They are not designed for long-term employment. A significant increase in the minimum wage would lessen the incentive for young people to further their education by continuing on to university, community college or technical training.