The economy is struggling, employers are shedding excess workers, the banks are floundering, so what can the government do to make things better? Other than getting the hell out of the way, not much . . . but they can certainly make things worse:
Come Friday, the federally mandated minimum wage will jump from $6.55 an hour to $7.25 — an 11 percent increase. At a time when employers are laying off workers, Washington is going to make it more expensive to keep them.
If you’re a minimum wage employee, your job will pay more, but only if it still exists. These days, most companies are scrutinizing every position on the payroll to make sure it’s worth the cost. Raise the toll, and some employees will find they are no longer valuable enough to make the cut.
Economists generally agree that increases in the minimum wage cause unemployment even when the economy is prospering—something it has not been doing for the last year and a half. David Neumark, a professor at the University of California, Irvine, estimates this rise will destroy some 300,000 jobs among teens and young adults.
The problem is that by trying to forcibly change the relationship between entry-level workers and employers, the government actually hurts both parties. Entry-level workers whose lack of training or aptitude makes their work less economical at a mandatory higher pay rate lose the most: their jobs and their prospects of other minimum-wage jobs. Employers lose out, too, because some work is now uneconomical to have done, it either doesn’t get done at all or is outsourced.
