“naive and superficial at best and political demagoguery at worst.”

If we really want to help people, why don’t we simply mandate an increase in the minimum wage? JLF’s Roy Cordato explains the folly of the Leftist argument in favor of a higher minimum wage.

So whose employment prospects will be put in jeopardy by a 40 percent increase in the minimum wage? This will not, of course, affect college graduates, accountants, and skilled manual laborers such as electricians and plumbers. It will instead affect those in society who have little education and little or no job experience, i.e., teenagers, particularly minority teenagers, high school dropouts, etc. In other words, very low-skilled workers who may be entering the labor market for the first time. 

It should be pointed out that the current mandated minimum cost of labor is already taking its toll on this group. The unemployment rate for 16- to 19-year-olds is about 21 percent, and the African-American unemployment rate for this group is over 36 percent. The unemployment rate for high school dropouts is over 50 percent. 

Empirical estimates by two Duke University economists suggest that for each increase of 10 percent in the minimum wage there will be a 2.9 percent decrease in the likelihood that a low-skilled worker will find employment. This means that the increase in the minimum wage being proposed by Obama and the Democrats implies almost a 12 percent decline in the chances that a low-skilled worker will find employment. For those low-skilled workers who start out severely disadvantaged in the marketplace, this would be just one more obstacle placed in their path.

Advocates of minimum wage laws ignore the economic analysis and the idea that there is any relationship between productivity of the worker and wages paid. They buy into the myth that people’s wages can simply be raised and poverty can be eliminated by government decree, without any change in workers’ productivity. 

By assuming that increasingly higher minimum wages will cause no one to be unemployed, they are making one of two assumptions; both are absurd. They are assuming either that there is no one in the labor force whose skills are so low that they cannot command the higher wage or that employers simply ignore worker productivity when considering the cost of hiring a worker.

The cost of doing business matters. To presume that government can force an employer to pay workers more and that there will be no ramification is silly.