This article is great! blog.skepticallibertarian/2013/02/25/remedial-economics-and-the-minimum-wage-for-presidents/ As Professor Antony Davies puts it, “Prices are not levers that set value; they are metrics that reflect value.” Anyone who isn’t skilled or experienced enough to produce as much in output per hour as the minimum wage requires they be paid for that work simply will not get a job. Employers will invest in more machines to raise the productivity of their employees, and hire more skilled workers. Given that low-wage positions experience a high turnover rate (McDonald’s is well over 100% annually), this means that some workers may get a few weeks or months of higher pay, only to be unable to get a job at all some time in the future, when they are back out competing in a market flooded with surplus (i.e., unemployed) workers. Their hourly wages drop to zero. Minimum wage earners are overwhelming young, female, less educated, part-time, service employees. Less than 4% of Americans over age 25 make minimum wage. Women are about 40% more likely than men to make minimum wage or less. 13% of workers without high school degrees make the minimum, compared to 5% of those with a HS degree and less than 3% of those with a college degree. 14% of part-time workers earn minimum wage vs. only 3% of full-time workers. 60% of minimum wage earners work in service industries (composing about 14% of all service workers). It’s not as if Congress is oblivious to the problem, either. In July of last year, the House of Representatives voted 378-11 to stop an automatic increase in the minimum wage for American Samoa. A 2011 GAO report found that the increases mandated for American Samoa in the 2007 law had led to the closing of a tuna factory, which drove the island’s unemployment rate to nearly 20% by 2010. The measure was supported by their governor, nonvoting representative, and Chamber of Commerce Chairman, who remarked that, “Congress is to be thanked for preventing further economic calamity in American Samoa and preventing continual increases to the minimum wage which would have led to additional layoffs in our fragile economy.”
Posted on: Wed, 31 Jul 2013 04:36:28 +0000