NCPA - National Center for Policy Analysis

A SIMPLISTIC SOLUTION

June 30, 2004

The federal minimum wage is like a tax on small businesses that reduces their ability to hire and raise wages, says Bruce Bartlett. Small businesses are a critical stepping-stone into the labor force for most workers. If one is young, poor, undereducated or a member of a minority group, they are the most likely places one can get a job.

According to 2002 figures from the Bureau of Labor Statistics:

  • Someone with less than a high school diploma is almost twice as likely to work in a small business as a large one.
  • Half of all workers earning just the minimum wage are under 25 years of age, and a fourth are between the ages of 16 and 19.
  • One third of all minimum wage workers have less than a high school diploma.
  • Three-fifths of minimum wage employees work only part-time, and frequently are students or others living in homes with high family incomes.

Nevertheless, minimum wage jobs are not unimportant. They are the first rung on the employment ladder for most workers. The experience they gain in such simple areas as showing up for work on time, learning to follow instructions and interacting appropriately with customers, clients and patients are critical to success in life, says Bartlett.

A vast amount of research showing that raising the minimum wage is a highly ineffectual means of aiding the poor. However, Sen. John Kerry (D-Mass.), the presumed Democratic presidential nominee, supports raising the minimum wage from $5.15 per hour to $7.

Source: Bruce Bartlett, "A Simplistic Solution," National Center for Policy Analysis, June 30, 2004.

 

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