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Obama’s Minimum Wage Increase May Wipe Out 600,000 Jobs for Young Adults, Minorities
Posted By Daniel Greenfield On February 16, 2013 @ 9:14 pm In The Point | 6 Comments
The perverse part of the rule of O is that his economic policies have done the most damage to the economic prospects of his own base. The part of his base that isn’t working off government grants at non-profits or green energy ecoscam factories.
In his State of the Union address, Mr. Obama proposed an increase to $9 an hour by 2015 from $7.25, and then indexing the minimum to inflation.
Some workers will get a $1.75 raise. Great. But others—typically the least educated and skilled—will be priced out of the job market and their pay won’t rise to $9. It will be zero.
University of California at Irvine economist David Neumark has looked at more than 100 major academic studies on the minimum wage, and he says the White House claim of de minimis job losses “grossly misstates the weight of the evidence.” About 85% of the studies “find a negative employment effect on low-skilled workers.”
During the last series of wage hikes to $7.25 from $5.15 that started in July 2007 as the economy was headed toward recession. The last increase hit in July 2009 just after the recession ended, and as the nearby chart shows, the jobless rate jumped for teens and black teens especially. For black teens, the rate has remained close to 40% and was still 37.8% in January.
A study by economists William Even of Miami University and David Macpherson of Trinity University concludes that in the 21 states where the full 40% wage increase took effect, “the consequences of the minimum wage for black young adults without a diploma were actually worse than the consequences of the Great Recession.”
William Dunkelberg, chief economist for the National Federation of Independent Business, says that after the July 2009 increase 600,000 teen jobs disappeared in the next six months even as GDP expanded.
Obama’s economic cluelessness causes him to think of business and wages as separate entities. The idea being that he can raise one without affecting anything except how much money all the business owners use to buy gold plated yachts. In the real world, the minimum wage affects the cost of doing business which affects the number of available jobs, the capital available for expansion and the cost of living.
A bakery that raises the minimum wage then turns around and raises the price of bread so that the wage hike goes out the door in the added cost of bread and everything else that the workers buy. It’s a treadmill in which everyone has to run just as hard to stay in place while the variables only appear to change.
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