Is The Minimum Wage a Job Killer?

Education key to defeating minimum wage

by Ian Huyett

In case you’d been wondering what arcane algorithm Democrats used to choose $10.10 as their proposed new minimum wage, President Obama told us during last night’s State of the Union speech. “It’s easy to remember: 10.10,” chirped the president nonchalantly. Sidestepping the question of whether the minimum wage is effective, he urged us to “give America a raise” as if it were the most obvious thing in the world.

Polls show that a majority of Americans agree that the minimum wage should be raised. Yet, as Reason Magazine pointed out yesterday, most Americans say they would oppose raising the minimum wage if they thought that even some businesses would have to employ fewer workers as a result. Libertarians should find these results encouraging: educating the public about the dangers of this policy has the potential to turn the tide against it.

minwageAccording to the US Small Business Administration, small businesses employ about half of the country’s private sector workforce. This may be the clearest argument against raising the minimum wage. It’s common sense that a business with few resources may have to employ fewer people if it’s forced to pay its workers more.

While it’s true that the overall effects of the minimum wage can be obscured and difficult to study empirically, a majority of studies do support the view that raising the minimum wage reduces employment among low-skill workers.

The progressive Economic Policy Institute recently made the news for getting 600 economists to sign a petition calling for a higher minimum wage. Yet, as recently as 2012, the EPI was touting a study on the minimum wage that has been discredited since 1996. In fact, Card and Krueger’s 1994 phone survey of New Jersey restaurants was the study most frequently cited by minimum wage advocates as recently as 2006.

In 1996, it was revealed that Card and Krueger’s numbers bore “no relation to numbers drawn from the payroll records of the restaurants the New Jersey study claims to cover.”

Why would economists recycle a discredited study for 16 years? Reason Magazine’s survey may offer a clue. It showed that 45% of Democrats say they would support raising the minimum wage even if it results in workers being fired.

When arguing against raising the minimum wage, then, libertarians may want to focus on Republicans and independents. That might be more productive than talking to Samantha Bee.

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