Minimum Wage: $9 just as bad as $10

Mar 14, 2014 by AFP

By Thomas Fletcher

While most members of Congress are beginning to shy away, Democratic leaders are trying to salvage their misguided plans to raise the minimum wage by floating an option that would raise it $9 as opposed to $10.10. If this is the best bad option that liberals can muster, then American businesses and workers alike are in trouble. Testifying before Congress, Director of the Congressional Budget Office, Douglas Elmendorf said that raising the minimum wage would cause the economy to lose 100,000 jobs. This is yet another sign of the Obama administration and the Democratic Senate continuing to pursue job-killing policies.

There is a wide consensus among economists and business leaders that minimum wage hikes do more harm than good. Recently over 500 economists signed a letter sent to Congress calling an increase in the minimum wage “a poorly targeted anti-poverty measure.” Studies have shown that raising the minimum wage will force businesses to cut hours and lay off workers. A 2004 study by the University of Wisconsin confirmed that indeed employers stopped hiring, cut jobs and hours in order to save money. As Bill Gates recently remarked at an event, “When people say we should raise the minimum wage — I know some economists disagree — but I worry about what that does to job creation.”

Even worse, raising the minimum hurts the very people it’s supposed to help—low-income, low-skilled workers and teenagers—in the form of higher unemployment. This is a problem because it prevents them from getting entry level jobs, which they need to develop skills that are valuable in the work force. The government needs to stop focusing on intentions when trying to increase wages through legislative action and look at the outcomes when proposing far reaching policies that have potentially devastating impacts.

If the President and his Congressional allies were serious about increasing Americans wages and getting them back to work, they would be finding ways to reduce costs and roll back the red tape on businesses. They should for proposals that create jobs instead of doubling down on the failed policies of the past, With evidence against raising the minimum wage continuing to mount, it’s still not too late to stop it from becoming law.

Read more: AFP’s letter of opposition to raising the minimum wage