Budget & Tax
| March 20, 2014
How to kill half a million jobs
You’d think the Obama administration, plagued with miserable unemployment figures virtually since day one, would steer clear of policies that would toss even more people out of work. Think again. According to the Congressional Budget Office, the President’s plan to boost the federal minimum wage from $7.25 to $10.10 an hour would effectively dump at least half a million jobs from the economy.
That’s not a solitary opinion. Oklahoma-based Express Personnel surveyed employers and found that 38 percent would be forced to lay off workers if the minimum wage increase was enacted. Another survey of chief financial officers said more than half of retailers would also cut hiring. Then, more than 500 economists, including two from the University of Oklahoma, signed a letter saying a minimum wage increase is a job killer. It’s simple economics: when you have to pay more for something than it may be worth, you will buy less of it.
So who earns minimum wage? According to a Bureau of Labor Statistics study in 2011, just 5.2 percent of American workers are paid at or below the minimum wage, the vast majority of them under 25 and working part-time jobs, often while going to school. That’s down from 13.4 percent of the workforce in 1979. The minimum wage has become in practice a training wage for new entrants into the workforce, and many of those young workers are just glad to have a job. Raise the wage and fewer of them will be working, while those who are will be scrambling to produce more with a smaller staff.
By the way, it won’t cost $10.10 an hour. Add in the Obamacare employer health insurance mandate and required unemployment and employer tax payments and each of those workers would cost almost $13 an hour. How many burgers would they have to flip to make that viable?