Minimum Wage
Yesterday, John Combest linked to a KOMU article about minimum wage and its effects on the youth work force. As the minimum wage increases, businesses must make tough decisions about their capital allocations to labor, which disproportionately hurts younger employees. The Show-Me Institute’s executive vice president, Dr. Joseph Haslag, was quoted in the article, explaining the effects of minimum wage on younger workers:
Haslag said the government is manipulating the market by increasing the hourly wage employers [must pay]. This forces employers to hire less people and cut hours. This hurts the younger workforce because they are usually the most inexperienced and least productive.
Minimum wage policies are detrimental to the economy, entailing another cost for employers that increases prices and eliminates both jobs and work hours. Younger and lower-skilled workers bear the brunt of this cost. For further reading about the minimum wage, there are relevant Show-Me Daily blog posts and articles by other Show-Me Institute scholars.
Great post, Caitlin.
The Wall Street Journal also published an article on the subject of minimum wage laws and their effect on younger workers.
http://online.wsj.com/article/SB10001424052970203440104574402820278669840.html
By decreasing the number of jobs available to them when they are young, the minimum wage has long-term disadvantages. The article references a Stanford study that demonstrated that people who do not work as teenagers have lower long-term wages and employability.
Comment by Christine Harbin — October 6, 2009 @ 12:44 p.m.
As I recall my own early job experience… not too long ago, I had 2 part time jobs. One paid $9 an hour, the other $8. I cut back my hours at the the $9 and hour job because the $8 hour job had longer shifts and was more consistent, and I could generally work as much as I wanted. The $9 an hour people were stingy with overtime and very unreliable from week to week.
As a young adult supporting myself, I would have worked 80 hours a week at a $5/hour job if at the end of the month I got more money and could pay my gas bill.
While I am fearful of not having a minimum wage for the ways it could be abused, my experience tells me that getting paid a higher wage doesn’t mean you make more money. I also think there would be great opportunities for families to supplement income if businesses could segment work into smaller parcels. My 8/hour job hired someone who was illiterate once, and there were huge chunks of what constituted a part-time position that he couldn’t learn or perform. They had to fire him or risk losing money to pay someone who couldn’t do everything they needed him to do. He had a family and I’m guessing he would have preferred some money to none – and if that 3/hour job washing floors was available at several different businesses, he could have worked definitely more hours but in the end made what he was making.
That may be “unseemly” to those who feel defensive about poor people, but I was pretty damn poor at the time and I would have gladly worked longer hours for less if it meant that I got to pay all my bills at the end of the month instead of skipping months, being behind and always having to worry about how I was going to squeeze enough hours out of my jobs. I did the math – one hour at $9 was not as much as two hours at $8 – or even $5.
Comment by emily — October 16, 2009 @ 12:20 p.m.