7/14/2009

Guess what: Raising the minimum wage increases unemployment

Who would have guessed? Minimum price controls creates unemployment.

Here's some economic logic to ponder. The unemployment rate in June for American teenagers was 24%, for black teens it was 38%, and even White House economists are predicting more job losses. So how about raising the cost of that teenage labor?

Sorry to say, but that's precisely what will happen on July 24, when the minimum wage will increase to $7.25 an hour from $6.55. The national wage floor will have increased 41% since the three-step hike was approved by the Democratic Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That's a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins. . . .

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2 Comments:

Blogger Raven Lunatic said...

Another thing I noticed, when I had a minimum wage job and the government gave me a raise: everywhere that employed minimum wage workers suddenly charged more for the same services/products. The effect of this is that I had more money yet less buying power.

I'm not certain, frankly, that raising minimum wage does anything but slow the economy, and increase taxable income.

7/14/2009 4:20 PM  
Blogger Angela said...

Everybody in the country should be required to take economics 101.

Price floors create surpluses. Duh.

7/14/2009 8:27 PM  

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