The minimum wage is in the news again after two major policy pushes over the past few months. In November, President Obama announced his support of a bill that would raise the minimum wage up to $10.10 an hour. One month later, a nationwide fast food strike erupted advocating a so-called living wage of $15 an hour. While such a minimum wage hike may sound beneficial to young and low-skilled workers at first glance, in reality it will only hurt the very people its meant to help by raising unemployment.
A hike in the minimum wage is a near fatal blow for our nation's young people. In November 2013 the unemployment rate of the United States was roughly 7 percent. However the youth unemployment rate for workers age 16-19 was nearly triple that rate at 21 percent. Young people are clearly struggling to get jobs and are having difficulty building experience.
[sharequote align="center"]Young people are clearly struggling to get jobs and are having difficulty building experience.[/sharequote]
The same can be said for minority workers. Black Americans had an unemployment rate of 12 percent and Latinos had an unemployment rate of 9 percent. If the federal government wishes to lower these unemployment rates, it should make it possible for businesses to be able to afford to hire young people and minorities with less work experience.
Proponents of the minimum wage may worry that not raising the price floor will not provide adequate compensation for low-skilled workers to survive. But, who exactly are these low-skilled workers?
The U.S. Bureau of Labor Statistics last “Characteristics of Minimum Wage Workers” study gives us some insight.
- 40 percent of individuals on minimum wage are teenagers or dependents living with family members.
- 56 percent are adults living with a spouse who works as well.
Thus, in total, 96 percent of minimum wage earners do not solely depend on that income to survive. Consequently, the federal government should keep the minimum wage at its current $7.25 floor, or maybe even lower, so as to give young people greater opportunity to work and gain job experience to access higher paying jobs.
In this photo taken, Aug. 1, 2013, demonstrators protesting what they say are low wages and improper treatment for fast-food workers march in downtown Seattle. (AP Photo/Elaine Thompson)
Europe provides ample evidence of the real world effects of the minimum wage on unemployment.
According to data from Eurostat, Germany has one of the lowest unemployment rates in the European Union at 5 percent and lowest youth unemployment at 7 percent as of November 2013. It should come as no surprise that the country also has no minimum wage. Additionally, Norway also has no minimum wage and has an unemployment rate of 3 percent and a youth unemployment rate of 8 percent as of October 2013.
In stark contrast, other European countries with a minimum wage aren’t faring as well.
Spain, for example, has an unemployment rate of 27 percent and a youth unemployment rate of an astounding 56 percent. Not-coincidentally, they also have a minimum wage of 752.85 Euros per month ($1,022). France has a minimum wage of 1,430.22 Euros per month ($1,941) and an unemployment rate of 11 percent with a youth unemployment rate of 26 percent as of November 2013.
Naturally, there are additional factors at play that determine a nation’s employment. However, it is nonetheless seen that minimum wage has a very direct effect on unemployment rates, both in theory and in the real world.
Of course, some economists disagree about the job-killing nature of the minimum wage. Famed Princeton economist Paul Krugman believes that the minimum wage has no effect on employment, as he often opined in his "New York Times" column.
However, if this was the case, why should the government be so stingy? If there are no effects of increasing the minimum wage, why not increase the minimum wage to $200 an hour, or even higher? The obvious Economics 101 answer is that raising a wage floor creates a surplus of workers and lowers demand for jobs, thus increasing unemployment.
Indeed, the minimum wage hurts the very people it is designed to help. Ensuring that a select few individuals will get raises but that others will go without any income or job experience at all.
If President Obama or the minimum wage advocates truly cared about the young, the poor, or minorities, then they should focus on making it affordable for businesses to employ new hires with low skills, experience or education so that they have the chance to get started and build themselves up.
Young people like ourselves don’t want a government-mandated wage. We want to earn it. By making it harder for businesses to employ us, the government is taking away our dignity and denying our ability to work.
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