minimum wage

States that raised their minimum wages have seen a huge loss in job growth since the beginning of the year

The thirteen states that saw minimum wage increases on January 1 have kept a combined 129,200 workers out of employment opportunities since the beginning of the year, according to data published this week by the American Action Forum.

The bulk of the minimum wage hikes were automatic inflation adjustments already mandated by state legislatures. Four state legislatures, however, took specific action to raise their minimum wages, the increases of which range from 45 cents to $1 per hour.

“While many assume that it would come out of profits of large companies, in reality it only affects restaurants and retail businesses that have narrow profit margins,” Ben Gitis, a policy analyst at the American Action Forum, explains in the study. “They have no choice but to either reduce their current employment levels or put off plans to expand and make new hires. As a result, the cost of the minimum wage comes out of the pockets of unemployed workers who are denied an opportunity to work.”

The study looks specifically the impact of these minimum wage increases in the restaurant and retail industries. States that raised their minimum wages have seen an anemic 0.6 percent net-job growth in these two industries since the beginning of the year, while states that kept their laws unchanged saw a 2 percent increase in net-job growth.

Gitis concedes that an unusually cold winter may have had an impact on overall job growth, but notes that states that raised their minimum wages “experienced relatively warm weather” than states in which wage laws remained unchanged. He also points out that other factors may have come into play.

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Forbes explored this issue at length a while ago, but their findings remain just as true today. Slight increases in the minimum wage have been shown to cause job losses, as companies downsize to absorb the increased costs of their labor force. One thing that has changed is the effect of ObamaCare on the situation. Many employers are already looking at cutting hours of low wage workers to avoid the increased costs of benefits for employees.

Liberals are demonizing this action, and are still demanding higher wages, while ignoring what should be obvious. Increased costs must be paid one way or another, whether by cutting labor costs, increasing prices for consumers, or a combination of the two. Since the latter is a likely solution for many companies that employ low wage workers, that would mean the continuation of a vicious cycle for the very people that liberals would hope to help by increasing the minimum wage in the first place.

Low wage workers tend to use the goods and services of companies like fast food restaurants and WalMart, so even if their wages are increased, it probably will not help them very much in the end. A pay raise doesn’t do much good if the price of goods and services goes up, too.

Quit whining about the minimum wage

I’ve heard a lot recently about the minimum wage.  Fry cooks throughout the nation took to the streets to lament their dreadful lot in life.  Liberal wonks have taken to the airwaves to complain about how one just can’t live on $7.25 an hour, and it should be raise.  Some of these wonks say it should be doubled even.

Oh, cry me a freaking river.

Before I get into specifics, let me point out that as an entrepreneur, if I took how much I made running two businesses and divided it by the number of hours I work, I’d probably make less than $1 per hour, so don’t try to counter this as being “the rich looking down on the poor.”  I can barely pay my bills, so I hardly count as rich.  Also, for the record, only one of these businesses is mine, so don’t pull the “you own two businesses, so clearly you’re well off” crap.  My wife makes more than minimum wage, but not by a whole lot.  We have two kids.  We are scraping by, and just barely.

Now, about the minimum wage.  There are some things the wonks are right about.  One can not live on a minimum wage income — $7.25 per hour just isn’t enough to pay rent, a car payment, insurance on said car, utilities, and some kind of phone.

Of course, it’s also not meant to do that.

Minimum wage jobs aren’t skilled labor.  They’re entry level jobs.  That means they’re for people entering the workforce.  They’re for high school and college kids.  They’re for people who have left high school and are trying to figure out what they want to be when they grow up.  They’re for the young person trying to get established.  Hence the term “entry level.”
