Thursday, July 16, 2009

Minimum wage = minimum benefit

Here's some economic logic to ponder. The unemployment rate in June for American teenagers was 24% and even White House economists are predicting more teenage job losses. When the minimum wage increases to $7.25 an hour from $6.55 on July 24, it will effectively raise the cost of employing teenagers (and other entry-level workers) once again, thereby exacerbating the situation.

The national wage floor will have increased 41% since the three-step hike was approved by Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That's a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins.

If Congress were wise and compassionate, it would at least suspend the wage hike for one or two years until the job market recovers. We know this Congress won't do that, but someone has to speak up for the poorest, least skilled Americans.

Wall Street Journal (click here)

1 comment:

Sid Raisch said...

If ObamaCare passes and requires employers to pay for insurance for non-student employees, but has an exemption for student employees it will force employers to replace full and possibly part-time workers with students if they are unable to afford to pay the benefit taxes. Starbucks apparently has the financial ability to afford insurance benefits for part-time employees, but many other small retail businesses in particular cannot charge the prices necessary to afford the coverage. The trouble is that student employees are usually not available early enough in the spring to satisfy the seasonal demand in the green industry.