Conservative Student News

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Minimum wage appears to be a very hot issue in current events. We see a lot of news regarding minimum wage and discussion heats up every time it is increased. In fact, however, the minimum wage is not as big an issue as the media can make it out to be.

Only about 5 percent of all jobs in this country are minimum wage paying jobs. Of those, it is estimated that only about 25 percent are held by individuals trying to sustain a family. The vast majority are held by high school students, college interns, and retirees. These are people working not because they necessarily have to, but because they want to; they wish to gain experience and start supporting themselves (in the case of a college intern), or find a way to pass the time (in the case of a retiree).

If an economist were asked if the minimum wage should be eliminated, they should not hesitate to say: "yes." It is well known that minimum wage creates unemployment among the least skilled or trained workers, the very people who minimum wage policy is designed to protect.

When the minimum wage was instituted in 1938 under the Fair Labor Standards Act, the U.S. Labor Department estimated that the minimum wage of 25 cents per hour caused only about 30,000 to 50,000 workers to lose their jobs instantly. These numbers were grossly underestimated and the state Labor Department in Texas indicated that the entire pecan-shelling industry was shut down, causing at least 40,000 to be out of work in Texas alone.

Besides unemployment, there are several other negative impacts of minimum wage laws, the most obvious of which is a reduction in non-wage benefits. One of the most common ways for a company to cover its increased costs due to higher wage expenses is to cut employee benefits such as health insurance and retirement packages.

Many cuts in "benefits" may be under the surface, however. For example, if you have always thought of the company Christmas party as a lame affair, no need to worry anymore. Thanks to minimum wage, the party went out the window. How about that stale coffee in the break room everyone was always complaining about? Again, no need to worry: Now everyone will just have to bring their own coffee. Enjoying your cushy office space at work? Maybe instead of renting a storage space for extra inventory, your company will just take over your office and send you to a nice cubicle. Don't worry; I'm sure it has sound-proof walls for those private telephone conversations.

Single mothers are one group hit especially hard by minimum wage increases. A study by the Employment Policies Institute found that for every 10 percent increase in the minimum wage, the average uneducated single mother sees her income decline by 9 percent. Single mothers are portrayed by the liberal left as one of the primary beneficiaries of minimum wage. This research clearly shows otherwise.

Most employers respond to artificially-increased labor costs by cutting hours or jobs altogether for the most vulnerable members of the workforce, including those who are less educated than other workers.

The negative effects go on and on. Outsourcing of production to overseas sweatshops is very common today. When was the last time you bought an article of clothing with "Made in the USA" written on the tag? Small family businesses, already struggling to compete against Wal-Mart and other giants, are forced to close their doors due to increased labor costs, sometimes ending generations of family ownership.

Manufacturers have a lot of choices when it comes to the inputs that are used to produce their product. Naturally, they are going to choose the lowest cost inputs in order to maximize their profits. Increased labor costs due to minimum wage lead to lost jobs as more firms opt to rely on technology rather than human capital.

In short, minimum wage is an outdated concept which needs to be eliminated on the federal level. It places an artificial price floor on the labor market, driving demand for jobs up while at the same time employers' job supply falls. Politicians need to consider the issue from an economic standpoint and consider the well-being of the people who they represent and not worry so much about the impact their decision might have on their ratings in polls. Through job cuts and outsourcing, minimum wage hurts the very individuals it was designed to help-poor and inexperienced workers.