House Committee on Education and Labor
U.S. House of Representatives
Republicans
Rep. Howard P. “Buck” McKeon
Ranking Member
Fiscally responsible reforms for students, workers and retirees.
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Blog
Minimum Wage and Unemployment?
Amid much fanfare, congressional Democrats last year drafted and hastily approved an increase in the federal minimum wage. At the time, Republicans struck a more cautious tone, expressing a concern that without proper care, the wage increase could have serious and harmful unintended consequences. For instance, Republicans offered an alternative proposal that coupled the minimum wage increase with proposals to expand access to affordable health care and protect small businesses and their workers.
Nearly a year after the first phase of the wage increase kicked in, economists have begun to notice at least one potential unintended consequence -- teen employment is down. Way down.
According to economist David Neumark of the University of California at Irvine, for every 10 percent increase in the minimum wage, employment for high school dropouts and young black adults and teenagers falls by 8.5 percent. In the past 11 months alone, the United States’ minimum wage has increased by more than twice that amount.
And there's this.
It is at least possible that in addition to the more general problems in the US economy, last summer's increase in the federal minimum wage as well as the next jump coming in late July are behind the particulars here. Last July, the federal minimum wage increased to $5.85/hr and it will go up to $6.55 on July 24 of this year. With a sluggish economy, it certainly seems possible that the higher minimum wage is discouraging employers from hiring lower-skill workers whose productivity cannot justify paying them that wage, particularly if they know they will have to give them a raise come late July.
With unemployment jumping a staggering 0.5 percent last month alone, many are beginning to wonder whether the Democrats' economic proposals are doing more harm than good for the low-income workers who are struggling the most.
| Posted by Press Staff (06-10-2008, 06:04 PM) filed under Jobs and Job Training |
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