faethor said:
Reminds me of the time our own loonie Michele Bachmann stated all employment problems would be fixed if the USA was to eliminate the minimum wage.
The effect of a minimum wage is a classic example of the law of unintended consequences. Minimum wages laws create unemployment. The unemployment burden falls mostly on young workers and people with few skills. The minimum wage, in other words, prices young low skilled workers from the job market.
Between 2007 and 2009 the federal minimum wage increased by 41%, from $5.15 an hour to $7.25 an hour. Approximately 98,000 jobs--a 6.9% reduction in employment among 16- to 19-year-old workers occurred in the states affected by all three stages of the federal minimum wage hike.
The latest government stats show an unemployment rate of 9.7% among adult males and 7.9% among adult females. The teenage unemployment rate is 26%. Unemployment for black teens is 40%.
An individual will not be hired at minimum wage if an employer feels that he is unlikely to produce at least that much value. This is common business sense. Thus, individuals whom employers perceive to be incapable of producing value at the arbitrarily set minimum wage rate are not hired at all, and people who could have been employed at market wages are left unemployed, the least experienced, least skilled, and least productive workers.
Minimum-wage legislation is and always has been the result of special-interest politics. Behind the rhetoric of economic justice and fairness lie purely self-serving political considerations of organized labor. Labor unions and their members are the most obvious beneficiaries of government-imposed minimum wages. As the established elite of the workforce, union members are on the high end of the minimum wage's redistribution process. Higher wages can be obtained by excluding other workers from the labor markets. Although unions already hold privileged positions in labor markets, minimum wages further increase their gains by raising employers' labor costs, using government policy to eliminate those who might undercut the union wage.
Government cannot create wealth by passing minimum wage laws. Otherwise, Congress would long ago have passed laws prohibiting poverty and establishing a minimum wage of $1,000 an hour. In such a world, everyone could be a millionaire.