The Economist Milton Friedman would sometimes lament the fact that victims of misguided policies are often invisible to the public. The steel tariffs instituted by George Bush, for example, cost thousands of jobs across the United States before he was forced to lift them. The few steel jobs he was trying to save were much more evident because the people were readily identifiable, but the families that lost their livelihoods were mostly invisible and spread out across the United States.
The minimum wage similarly has created millions of victims, none of whom are visible to the public at large. On the other hand, the poor worker in a fast food joint, who now has more cash at the end of the week, can be given a name and trotted out for all to see. This of course does not make the victims any less real than the beneficiaries. That is part of the tragedy of magic wand economics as practiced by politicians, they are able to decimate the livelihood for large numbers of people; as long as they are spread out and those they benefit can be put in front of a camera, no one notices.
There was a time when American black unemployment mirrored white unemployment within a small variance. Black teenagers fared even better, their unemployment was sometimes less than their white counterparts. What changed was substantial increases in the minimum wage. With each increase the pool of jobs not only decreased but increasingly went to whites who were more likely to have access to better education. The result has been catastrophic, work experience, vital for getting a foot in the door of success, has been denied millions. The desperation and disillusionment of many of these teens who never got a job followed them into adulthood
Today jobs like pumping gas, bagging grocery, and push mowing golf course greens are nearly gone; not due to automation but because of a minimum wage that makes these jobs too costly for employers. Additionally, entry level jobs at the bottom of the ladder have increasingly gone to those in the least need of them, better educated people living in suburbs. For black teenagers, unemployment runs roughly twice that of white teens. Whether black or white, the chance of a teen finding a job decreases with their family income level. Here too blacks fare much worse, What is for certain, the minimum wage has both decreased employment and shifted who gets employed.
While it is clear who is getting hurt by this minimum wage madness, who is it that is supposedly being helped? Recent studies show less than 3% of Americans earn minimum wage, this includes waiters and waitresses whose actual income with tips is far over minimum wage. Only 15%of those rely on their job to support a family (.45% of workers), and most of those get assistance from the state. In fact, the great majority of those earning minimum wage live in middle or even upper middle class households. Once more, most of those making minimum wage at anyone time get a substantial raise within a year. For almost all minimum wage earners, the job/wage is a temporary or transitional. Most people in the U.S. actually started working at or near minimum wage. What this all means is that the minimum wage is essentially a non-issue except for the millions of teenagers and others who have been priced out of a job and small businesses get driven under. Of course it is also important to politicians practicing the art of demagoguery.
Even if the minimum wage made sense, which it doesn’t, a federally mandated wage would not. There is simply no way one can compare the cost of living in say, New York with Tucson Arizona or San Francisco with Grand Rapids, Michigan. The economic variations between states is too great to establish a national bar for wages of any sort. Add to this the often huge differences within states themselves and you have an insanely impossible task.
When politicians get out their legislative magic wands and claim they are going to improve people’s lives, it is usually time to take cover. Raising the minimum wage would help struggling families like ObamaCare is fixing healthcare. Art Laffer called raising the minimum wage the Black Unemployment Act, and while he is right about it hurting minorities, its devastating reach goes far beyond the inner city. The minimum wage has been an economic typhoon to teenagers and slap down to those trying to get into the workforce. Minimum wage increases help workers like Hurricane Sandy helped local unemployment; sure home builders made more money but at what cost to everyone else?
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