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Apr 2, 201302:53 PMVan Lines

with Joe Vanden Plas

Minimum wage hike: When politics trumps economics

(page 1 of 2)

In January of 2013, the month before President Obama called for a 25% increase in the federal minimum wage, the unemployment rate among African American teens was 37.8%. A strong majority of Americans, 71% according to a USA Today/Pew Research Center poll, support the measure, a tribute to the nation’s willingness to make the tradeoff of fewer jobs for higher pay. If enacted, it would result in less entry-level job creation than otherwise would occur.

Actually, it’s not entry-level workers who would benefit most from the president’s plan, which would raise the minimum wage from $7.25 to $9 an hour. Just in case you wonder why collective bargaining units would care about the minimum wage when the average private-sector union member earns $22 per hour, it’s worth noting that some unions tie their baseline wages to the minimum wage.

They negotiate formulas for baseline union wages to be a certain percentage above the state or federal minimum wage, or that mandate a flat-wage premium above the minimum wage. Their contracts might even dictate that wage negotiations be reopened whenever the minimum wage goes up.

If they can get it, more power to them. I don’t object to unions pursuing these provisions at the bargaining table, I object to politicians who raise the minimum wage and argue they are doing it to help entry-level workers. With slack already in the labor market at the low-skill end, raising the cost of such labor isn’t likely to result in more employment opportunities for people scuffling to get their feet in the door.

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