If Only Most Americans Understood

A great summary of how harmful raising the minimum wage is.

Economists' consensus estimate is that a 10% increase in the minimum wage would destroy 1% to 2% of youths' jobs. A federal increase to $7.25 would, therefore, destroy about 800,000 to 1.6 million youths' jobs. Some older low-skilled workers would also suffer. And the hurt to youths isn't just short-term, according to economists David Neumark of the University of California, Irvine, and Olena Nizalova of Michigan State University. In a 2004 National Bureau of Economic Research study, they found that even as people reached their late 20s, they worked less and earned less the longer they had been exposed to a higher minimum wage, especially as teenagers.

These adverse longer-run effects, they found, were stronger for black teenagers. Their finding recalls the famous line from liberal economist Paul Samuelson's 1970 textbook, "Economics," about a proposal to raise the minimum to $2: "What good does it do a black youth to know that an employer must pay him $2.00 an hour if the fact that he must be paid that amount is what keeps him from getting a job?"

The focused support for the minimum wage comes mainly from labor unions, all of whose members earn more than the minimum. This isn't benevolence at work, but greed. Their leaders understand that the minimum wage prices out their low-wage competition: it acts like an internal tariff. If only most Americans understood.

Read the whole article here.