Minimum Wage Myths

Democrats keep pushing minimum wage increases as if the government can wave a magic wand and ignore economic reality. Steve Chapman, Tribune:

But small increases also provide only small benefits, at least to the workers who keep their jobs. And the change the economists endorse is not a modest one. It would lift the floor from $5.15 to $7.25--a 40 percent increase--in the space of 26 months.

If the federal government sought to discourage the hiring of low-skilled workers by making employers pay a 40 percent tax on their wages, no economist would expect low-wage employment to grow or remain the same. But that's exactly how this proposed change would work.

Supporters insist employers will reap benefits in lower turnover and reduced costs for training new workers. But if businesses could make more money with that tradeoff, the government wouldn't have to force them to do it--greed would be motivation enough.

Despite the minority view expressed in the ad, Hoover Institution economist David Henderson says the consensus in the trade is that each 10 percent add-on would destroy 1 to 2 percent of young people's jobs. So a $7.25 minimum wage could mean the loss of up to 1.6 million positions.

Hoover site here, where they routinely debunk myths of the left.