The hike in the minimum wage passed by the Democratic majority in Congress last year is a big reason teen joblessness is at its highest level in 60 years. Americans are now finding [again] out the true cost of the minimum wage increases.
Wall Street wasn't stunned when the U.S. jobless rate jumped to 5.5 percent in May from 5 percent in April. It expected a repeat of past arbitrary price hikes have had on hundreds of thousands of youths looking for summer jobs. Many, if not most, won't find jobs because they've been priced out of the market:
• The minimum wage was hiked 14 percent to $5.85 an hour last July.If that sounds like a lot, the actual cost is much higher after you fold in taxes, benefits and Social Security that businesses pay on behalf of young workers. Economist David Neumark of the University of California, Irvine, has found a 10 percent minimum wage hike cuts employment of young, unskilled workers by 8.5 percent. [historically, every 10% increase in the mandated wage has been followed by a ~2% decrease in entry-level jobs]
• Next month, it will go up an additional 12 percent to $6.55 an hour.
• In July 2009, it's slated to rise 10.7 percent to $7.25 an hour.
Employers forced to shell out an added 40 percent over three years to employ the least educated, least trained and overall least productive workers are finding a good reason not to do so. Young people should get paid more only after they work a while, gain some experience and actually become valuable to their employer -- rather than having higher pay mandated by the federal government.
[so why do they do it time and again if it hurts our lowest income earners the most? A: Government labor unions, virtually all of which have hard-wired their cost of living increases not just to inflation but also what the minimum wage is. It goes up, their pay goes up. sweet]
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