DURING HIS State of the Union speech Tuesday, President Obama proposed raising the minimum wage to $9 an hour - and then indexing it to annual increases in the cost of living, so that further raises would be small but automatic every year. Some liberals complained the wage hike was too small; some conservatives oppose the existence of any minimum wage at all, preferring to leave the matter entirely up to negotiations between an employer and employee.
Who is right? Should the minimum wage rise, or should it even exist? Joel Mathis and Ben Boychuk, the RedBlueAmerica columnists, wrestle with the implications. Workers should not live in poverty NINE dollars an hour might seem like a good raise in the minimum wage - the current rate is $7.25 an hour - except it's not, really.
President Obama himself campaigned in 2008 on raising the wage to $9.50 an hour. Adjusted for inflation, that would be $10.13 an hour in today's dollars, and even then it wouldn't be enough to pull American families above the poverty line. For a family of four, with one parent working full time, the minimum wage would have to be $11.78 an hour just to pull that family to the poverty line. And that's where liberals should start negotiations: With the idea that working a full-time job in this country won't leave your family in poverty at end of the workweek.
Opponents of the minimum wage will raise some objections to its increasing. They'd prefer that wages be left to negotiations between an employee and an employer - though never between an employer and a union - in order to determine a "fair" market wage for the work done. They also suggest that minimum wage laws do little to raise workers out of poverty. But nothing precludes an employer and an employee from negotiating a higher wage, of course. And it's worth noting that the minimum wage contains all kinds of exceptions, depending on the kind of work being done. But there's nothing wrong with a minimal standard for employee wages; if businesses can't afford that minimum, they're probably not going to last long in the market anyway.
Yes, there are studies to show that minimum wages don't tend to raise workers out of poverty. Then again, the minimum wage is often set below the poverty level. Let's see what happens when we raise the wage high enough to matter. Now would be a good time to start. Young people would be hurt most
PRESIDENT Obama must really have it in for young people. Not only will twenty- and thirtysomethings bear the disproportionate burden of paying for the president's health care "reform," the younger cohort and teenagers also would be hurt most by the president's minimum wage proposal. Youth unemployment is a real crisis today. Among teens - the bulk of the minimum wage-earning population - the unemployment rate is around 25 percent. Meanwhile, more than 6.5 million Americans between the ages of 20 and 24 - mostly young graduates - are sitting idle, completely out of the workforce, often with crushing student loan debt.
Raising the minimum wage sounds beautiful. More money for people struggling to lift themselves out of poverty! Who could possibly object? Most reputable economists, actually. Congress could raise the minimum wage to $9 an hour, but it doesn't mean labor is worth that much.
Raise the cost of labor, and you will get less of it, not more. The result isn't hard to predict: When the minimum wage goes up, the unemployment rate follows. University of Chicago economist Casey B. Mulligan estimates that the last federal minimum wage hike, which took effect in 2009, added 800,000 people to the unemployment rolls through December 2010. And, yes, Mulligan's study took account of the ravages of the Great Recession.
So what happens if President Obama has his way and the federal minimum wage rises to $9 an hour or higher? Money doesn't just appear out of nowhere. Businesses that get by with tight profit margins - restaurants, for example - won't necessarily hire. They'll raise prices, cut hours, or make do with the workers they already have.
In short, if you're a young person or a low-skilled worker, or you're a college grad struggling to find any work at all, a higher minimum wage will likely make your job a lot harder.