Policy Position

Minimum Wage

in Budget, Taxation, and the Economy
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Working for the lowest allowable wage is nobody’s ideal.
People are rightfully moved by the thought of their neighbors
toiling in menial work for small wages. They know how hard
it is to make ends meet, even with greater earnings.
They’d like to help. How? Some engage in charitable endeavors, not just ones that provide for their immediate
needs, but also ones that offer job and life skill training to
help people learn how to find and keep jobs. Some openly
seek to hire them and build them up as employees and
productive individuals who see they have something to offer
society. Some offer education and training, and some provide
ways to help employers find job seekers.
Some think the way to do it is have the government,
federal or state, enforce a large increase in the minimum
wage. They’re joined by politicians, activists, and of course
self-serving demagogues seeking to profit from their good
The Obama administration advocates raising the per hour
minimum wage from $7.25 per hour to $10.10 per hour, a
39 percent increase. Some push for much, much higher: to
$15 per hour, a 107 percent increase.
Here are things a higher minimum wage can’t do: It can’t
increase the skill level of any worker. It can’t expand payrolls. It
can’t keep the hours offered by employers steady. It can’t make
automation less price-competitive to more expensive human
labor. Finally, it can’t make employers stay in business. All it
can do is make it more expensive to employ low-level workers.
Compassionate or not, raising the minimum wage has the
bitter unintended consequence of putting the very people
out of work that well-intentioned supporters think they’re
helping: the poorest, the least skilled, and the disadvantaged.

Key Facts

  • Most minimum wage workers are new to the workforce,
    often unproven, and often not educated beyond high
    school. They are getting startup wages because they are
    startup workers.
  • Pew Research Center found only about 2.6 percent of the
    nation’s workforce is paid at or below the federal minimum
    wage. Slightly over half of them are between the
    ages of 16 and 24, and about one fourth are between the
    ages of 16 and 19.
  • Raising the minimum wage to $10.10 per hour could
    cost nearly 50,000 jobs in North Carolina, according to a
    recent study published in the Journal of Labor Research. It
    would affect not just the small portion of minimum wage
    earners, but all workers earning below $10.10 per hour.
  • Raising the minimum wage to $15 per hour would have
    an even harsher impact. That’s because it would affect all
    workers earning below $15 per hour — over 40 percent
    of the wage and salaried workforce in North Carolina.
    According to new research from the Heritage Foundation,
    it would cost over 330,000 jobs in North Carolina
    (full-time equivalent jobs) by 2021.
  • Economists agree that the minimum wage increases unemployment
    among young and unskilled workers. Why?
    Because employers are more likely to expect their output
    will be less than how much it will cost to employ them.
  • In 2015 the University of New Hampshire Survey Center
    found vast majorities of economists believe a $15-perhour
    minimum wage would result in:
    – Lost jobs
    – More skills required to get any job, even an
    entry-level job
    – Fewer young people finding work
    – Business closings
  • After the last large increase in the minimum wage (in
    2007), employment of teenagers fell by 10 percentage points within 5 years.
  • A Today/Reuters analysis in 2012 found that the teens
    hardest hit were also “those who may need the money
    most: teens from poor families in which a parent is out of work.” Least affected: teens from wealthier families with
    working parents.
  • Fewer jobs and less opportunity is no small matter. Labor
    researchers describe a lifetime “ripple” effect of someone
    having held a job: they’re more likely to keep working.
    A higher minimum wage that increasingly leaves poor
    teens and low-skilled workers behind only perpetuates the
  • A recent working paper from the National Bureau of Economic Research on the effects of a minimum wage increase
    found “significant, negative effects on the employment
    and income growth of targeted workers.” It keeps
    them from accumulating experience as well as income,
    and it limits their upward income mobility, even to rise
    just to the lower middle class.


1. Keep the state minimum wage no higher than the
federal minimum wage. Create no greater harm to the
poorest, least skilled, and least experienced workers in
North Carolina.


estimated-n-c-employment-losses-raising-the-minimum wage

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