February 7 2012

Minimum Wage Laws Are A Recipe for Higher Unemployment

Carrie L. Lukas

Last week, I wrote about Gov. Romney's “I-don't-care-about-the-poor” gaffe. It wasn't just political dynamite, but revealed a misunderstanding of the role “government's safety net” plays in keeping the poor poor, rather than providing positive support.

As Thomas Sowell points out today, another Romney statement during that same interview revealed that he really doesn't get how government mandates effect the economy—and ultimately work opportunities. Either than, or really must not care about the poor, since his call for higher minimum wages is a recipe for higher unemployment, particularly for black teenagers.

Sowell reminds us that black teen unemployment wasn't always higher than that of other demographic groups, and he tells his own story of getting a first job as a messenger in 1946. Today, high minimum wage laws have priced many low-skilled workers out of the labor force. Or as Sowell puts it:

The economic reason is not complicated. When you set minimum wage levels higher than many inexperienced young people are worth, they don't get hired. It is not rocket science.

The sad thing is that liberals who love minimum wage laws understand that first jobs aren't really about immediate compensation. They are stepping-stones.

My Harvard peers who rallied for “living wage” laws happily accepted unpaid internships over the summer. They knew that the value of gaining on-the-job experience in their desired field was more important than whatever earnings they could make elsewhere that summer.

Yet somehow they don't understand that the same principle applies not just to privileged ivy leaguers, but to anyone who is trying to gain marketable skills. Kids from lower-income families may more desperately need immediately compensation, but they also desperately need skills. Minimum wage laws don't necessarily encourage employers to pay more to workers who provide less value to the business, they may discourage employers from taking a chance on such workers. Those who can't get their foot in the door of the workforce ultimately pay the real price.

If Governor Romney wants to show his compassion for the poor, he could start by discussing how government regulations discourage job creation, and pledge to do away with such counter-productive policies as President, rather than to augment them.

 

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