By Jim Sykes
In President Obama’s State of the Union speech, he stressed the need of raising the minimum wage from $7.25 to $9 per hour. According to the president, this would alleviate poverty for “millions of working families.” The president has forgotten, or is ignoring, many widely accepted private and governmental studies showing that raising the minimum wage does not reduce poverty. It increases poverty by increasing unemployment.
The minimum wage was never intended for workers who need to support a family. The original purpose was to provide a mandated wage for workers first entering the work force to give them an opportunity to gain experience so that they could qualify for and demand higher wages.
No study has ever proven that increasing the minimum wage reduces poverty among families. In fact, many of the studies have shown that less than 20 percent of workers making minimum wage are the head of a family while about half are young Americans entering the work force for the first time.
If the minimum wage is raised above the amount that the businesses can afford for inexperienced workers, then workers earning less than that minimum amount will be fired or the business will raise their prices. It has been shown that more than 600,000 teen jobs disappeared after the federal government raised the minimum wage by 10.6 percent in 2009. The current unemployment rate for that age group is already 17.6 percent and $9 per hour would amount to an increase of more than 24 percent while the cost of living has only risen 6.6 percent.
Raising the minimum wage during the current sluggish economy would further harm the economy and the unemployment rate would rise reducing economic growth. A recent study by the CATO Institute shows that most of the academic evidence points to the negative effects of increasing the minimum wage.
The real median household income in the United States has already fallen more than 8 percent since Barack Obama was first sworn in as president. We don’t need more reduction in the median household income that would be caused by raising the minimum wage.
Instead of using income from businesses to hire more workers, business would then be required to lay off some of the current workers in order to remain in business.
Wage increases should be driven by productivity, experience, training and other factors. All of us should recognize that workers who started at the minimum wage one of two years ago have already increased their pay through an increase in experience and knowledge of their job.
In 1997, 6.7 percent or 4.75 million workers were earning at or below the minimum wage. In 2006, without any increase in the minimum wage, only 2.2 percent or 1.7 million workers were at or below the minimum wage proving that the free market is pretty efficient in improving wages for the workers.
This is not the time to place further demands on the small businesses that need to be hiring workers to improve our economy.
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Stumptalk is published weekly in the Crossville Chronicle. The opinions expressed in this column are not necessarily those of the Chronicle publisher, editor or staff. To contact Stumptalk, email coordinator Phil Billington at firstname.lastname@example.org.