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.