Given Gov. Steve Beshear's executive order raising the minimum wage for state employees, this is a good time to reprint my Courier-Journal column on why raising the minimum wage hurts those it is supposed to help.
With thanks to the C-J for permission to reprint:
Bill Clinton, angling to become First Dude, is running around the country urging an increase of the federal minimum wage, which now stands at $7.25 an hour. This is Slick Willie at his most cynical.
As president, Clinton opposed the late Sen. Ted Kennedy's plan to index the minimum wage to the cost of living, to go up automatically. Instead, Clinton chose an increase, without indexing. Reviewing documents recently released by the Clinton Presidential Library, the Huffington Post concluded that central to the Clinton administration's rejection of Kennedy's indexing proposal was this: "[S]ince the minimum wage would automatically rise each year, it would take away a good political issue for those who believe the minimum wage is an important tool to help low-income families."
That is, Clinton chose to throw a little something to poor people to win votes, but not permanently — so that Democrats could repeat the same manipulation whenever necessary to survive an election.
Republicans could extinguish the issue forever by agreeing to index the minimum wage. That would be a mistake, however, because the minimum wage is bad economic policy that actually hurts those it purports to help.
No politician can outlaw the law of supply and demand. When the government forces a private employer to pay workers more, that employer will either pass the cost along to consumers in higher prices, or it will use fewer workers, plus improved technology where possible, to do the same work. That means layoffs, reduced hours and fewer jobs for unskilled workers.
To be sure, those lucky enough to still have a job will make more with an increase, but for those who are laid off or unable to find an entry level job, the increase will be cold comfort: Their income will be zero. Democrats overlook that there is no right in this country to a job. The government cannot outlaw unemployment — it cannot order private employers to hire. By raising the minimum wage, Democrats would price out of the labor market the least productive, most unskilled. Delaying that critical first job for these citizens makes it that much harder to escape poverty.
The nonpartisan Congressional Budget Office in February released a study of the Obama administration's call to increase the minimum wage to $10.10. The CBO projected that Obama's proposal would eliminate 500,000 jobs and perhaps as many as 1 million jobs.
Consider, moreover, who would get cut. Of the half-million jobs that the CBO projects would disappear if the Obama increase is enacted, two-thirds belong to women. The layoffs and lost opportunity for work that a minimum wage hike would cause therefore would hit women disproportionately hard. Minority youths — who already have nearly double the unemployment rates of white youths — likewise would suffer disproportionately. Indeed, the unintended consequence of Democrats raising the minimum wage produces outcomes that — if caused by Republicans — would be slammed as sexist and racist.
Increasing the minimum wage distracts from the more serious issue of how to improve workers' skills so that entry level jobs are the first step in long, productive careers, and not a purgatory where the unskilled languish until the next time Democrats decide to give them a raise with other people's money.
Workers whose productivity exceeds that of the minimum wage will earn more than the minimum wage. So instead of hiking the minimum wage, the better course would be to ensure that every American who wants a decent education can get one, regardless of neighborhood or income. That will only occur when poor Americans have access through vouchers and charter schools to alternatives to those schools that have served them so poorly to date.
The minimum wage is also a liberty issue. The minimum wage forbids workers from accepting, and employers from offering, less than whatever wage the government has decreed. If private employers got together and colluded about setting a wage, it would be an antitrust violation. Yet when the government does it, Democrats call it fairness.
Our federal system generally permits states to raise the minimum wage higher than the federal minimum. That's why Moveon.org is running a "sign the petition" drive to increase the minimum wage in Kentucky.
Progressive bastion SeaTac, Wash., recently increased its minimum wages to $15 an hour. Look for higher prices and cut services at Seattle's airport. Here in Louisville, Jefferson County Attorney Mike O'Connell informed the Metro Council that it may legally raise the minimum wage; it is not — at this point — pre-empted by state law. It might be legal, but it is still a mistake. Raising Louisville's minimum wage will send jobs to surrounding counties. It will increase prices for those too poor to have transportation for bargain shopping.
Instead of "feeling our pain," Bill Clinton and those "progressives" who revere him should stop inflicting pain by recycling failed policies, like the minimum wage, that do real damage.