NCPA - National Center for Policy Analysis

THE MINIMUM WAGE AND UNSKILLED WORKERS

June 28, 2004

John Kerry's proposal to increase the minimum wage to $7 by 2007 will cost many Americans -- typically the young and the poorly educated -- their jobs, says the Wall Street Journal.

Unfortunately, these groups already suffer from high unemployment: one in six teenagers are out of work, while more than one in five black teenagers don't have a job. In addition to its effects on employment, the minimum wage does a poor job at targeting the nation's neediest individuals, says the Journal:

  • Most people earning the minimum wage are not poor, with more than 33 percent living with a parent or relative.
  • Only 15 percent of those working for the minimum wage are the sole breadwinner in a family with children.
  • Minimum wage workers tend to be college students or teenagers -- more than half of the 2.1 million people working at the minimum wage are 25 years old or less.

Therefore the goal of policymakers should not be to artificially raise wages, but rather to generate jobs -- even low-paying ones -- in order to provide a gateway into the workforce for those who lack experience and skills, says the Journal.

Countries that have relied on the minimum wage as a means to help the poor have incurred notoriously high levels of unemployment and weaker levels of productivity. For instance, France has an unemployment rate of 9.4 percent and Germany has an unemployment rate of 9.8 percent. By comparison, America has a rate of 5.6 percent, even though it is recovering from an economic recession, explains the Journal.

Source: Editorial, "Wages of Politics," Wall Street Journal, June 24, 2004.

For WSJ text (subscription required)

http://online.wsj.com/article/0,,SB108803150323145939-search,00.html

 

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