Second Thoughts on Raising Minimum Wage
Posted: September 18, 2015
Now that Labor Day is over, I have spent a lot of time thinking about whether it is really necessary to raise the minimum wage. In the past, I have been a proponent of making minor increases to the base wage, but now I am having second thoughts.
Since the cities of San Francisco, Seattle and Los Angeles have increased their minimum wage to as much as $15 an hour over the next several years, those cities have experienced a decline in the number of jobs in a variety of industries. For example, in Seattle, the first wave of minimum wage increases appears to have led to the loss of more than 1,100 food service jobs in that city. In San Francisco, which now has a minimum wage of $12.25 per hour, up from $10.74 an hour in May, more than 2,500 restaurant jobs have been lost in the city's metro division.
The loss of jobs attached to an increased minimum wage should come as no surprise. The Congressional Budget Office last year predicted that an increase of the minimum wage to $10.10 an hour would cause employment to fall by 500,000 jobs nationally.
In a time where the national labor participation rate is at an all-time low, (62.6 percent - the largest since the Carter Administration) a wage increase means little to the 5.9 million Americans who aren't in the labor force, but want to obtain a job now. There are also 6.5 million people who work part-time because they can't find full-time employment.
It seems to me that states who are adamant about increasing the minimum wage are not thinking "big picture". In other words, it appears that if government makes something more expensive, businesses will use less of it.
The worst part of this equation is the unemployment level in the youth population. Labor force participation for teenagers stands at 33.5 percent as of July, the fifth-lowest level since the Bureau of Labor Statistics began compiling data in 1948. Four of those lows have occurred in the past 18 months.
RANDOM THOUGHT: I received a news release from the City of Eau Claire this week that reminded me that South Barstow and Eau Claire Streets will be open to traffic once again. That means no more meandering through downtown Eau Claire to get to the post office each morning!