The Locker Room

The cost of low-skilled labor has been increased by nearly 41 percent since '07

Posted by Jon Sanders at 11:43 AM

Despite multiple stimulus bills and unprecedented spending, we are in a steep recession. North Carolina is at double-digit unemployment. Families are hurting. People across the state and nation are having to deal with smaller budgets and make tough choices.

Of course, federal, state, and many local governments are also worried about smaller budgets, but since they have the legal power to take money from others, most are opting for that tack instead of cutting spending. Heaven knows North Carolina is.

So not only are people oppressed by a sour economy in general, but also they are being hit from all sides by governments. Their incomes are down and their taxes and fees are being increased at all levels.

Obviously, such a situation is bad for people and terrible for employment prospects. The last thing governments need to do in such a dire period of unemployment is raise costs on people and businesses and thereby make it that much more expensive to employ people. It's not only bad, it's immoral.

But there's something perhaps even more immoral: making it especially hard to employ the poorest people among us. Yet that is what is also going on:

The federal minimum wage is set to increase later this month as the job market shows signs of further decay.

The federal minimum wage will go to $7.25 an hour on July 24 from its current level of $6.55, according to the U.S. Department of Labor. ...

Last July, the wage floor was raised from $5.85 per hour. The increases were mandated by a bill passed by Congress in 2007, when the minimum was $5.15 an hour, where it had stayed for years.

So in two years, the federal minimum wage has been increased by nearly 41 percent. Such a massive increase in the price of low-skilled labor will lead to much fewer jobs for low-skill workers, the poorest among us. Demand curves slope downwards.

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