MINIMUM WAGE/MAXIMUM TRUTH

This past week hundreds of people demonstrated At McDonalds headquarters in Oakbrook, Il. for a higher minimum wage. There have also been demonstrations in other cities in this country and in Europe. The demonstrators are demanding the minimum be increased from $7.25 per hour, to $15.00 per hour. On the surface it sounds like an  idea with merit. Demonstrators are saying they are demanding a "living wage" that will allow them to satisfactorily support their families. While the sentiment may be noble, the facts tell a different story.

Only 16% of people receiving the minimum wage were single parents. 94% of families with an adult who earns the minimum also have a spouse who works and supports the family.40% of all recipients
are teens who live at home with their families. The majority of people who start out earning the minimum receive at least one raise in their first 12 months of employment.

One of the arguments for raising the minimum wage is that it is good for employment; however, 85% of all studies find that increases in the minimum also increase unemployment among unskilled workers. When the minimum wage was enacted in 1948, the unemployment rate for white teens was actually higher than for black teens--10.2% for white teens; 9.4% for black teens. Today those numbers have shifted dramatically. Overall unemployment for teens in 2013 stood at 16%. For black teens, the unemployment rate was 50%. The The primary difference in those rates is that black teens enter the job market with lesser skills because of inferior inner city public schools. As employers are forced to pay higher and higher wages, they become far more selective in terms of the skillsets of  new employees.

Last week the citizens of Switzerland went to the poles and rejected a referendum that would have set their minimum wage at the equivalent of $25.00 per hour. In their wisdom, they knew what a disaster that would have been for their economy.

There are 2 simple truths to remember: As minimum wages increase, small  mom and pop businesses are forced to do more with fewer employees, thereby hurting their efficiency, and adding to unemployment. Second, if fastfood chains like Mickey D's and Burger King have to increase their employment costs by almost 100%, we all end up paying more for our food. Like rotary dial phones and 8 track cassesettes, the dollar menu will become a relic of the past. How does that help low income people?