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James Rosen



How Minimum Wage Affects the Job Hunt

December 14, 2009 - 2:42 PM | by: James Rosen

It’s been an article of faith for so long that the minimum wage offers a “hand up” to the people on the lowest rung of the economic ladder, but some recent studies show otherwise.

The most exhaustive of these is a landmark book published last year called “Minimum Wages.” It’s by two economists, David Neumark of the University of California and William Wascher of the Federal Reserve.

They examined sixty years of data and concluded the minimum wage actually cuts down on job opportunities and even wages, over time, for low-skilled workers.

Neumark broke down his theory for Fox News in simple, layman’s terms, starting with the premise of what would happen if the minimum wage were raised again, say, tomorrow.

“Now, many people, of course, will not lose their job.  Many people who were employed at the old minimum wage will, you know, have a raise in their wage, and they will still be employed at the new minimum wage,” Neumark told Fox News.

“A small number — and it depends how big the minimum wage increase is — will lose their job.

“Some people entering the labor market for the first time, or, you know, anew, will not be able to find a job because of the higher minimum wage.”

The last bump for the minimum wage was this past July, a seventy cent increase to $7.25 an hour.

In September, three months later, the teen unemployment rate hit 25.9 percent, a full two points higher than in July, and the highest since World War II.

Charles Lane, a member of the Washington Post editorial board, recently called for the minimum wage to be rolled back as a way of creating jobs.  That would require an act of Congress, and it’s not likely anytime soon. Democrats control both houses of Congress and the issue has become, particularly for Democrats, freighted with emotion.

“It’s a matter of human dignity.  I mean, who amongst us wouldn’t want to be treated with human dignity?  And to be paid dirt wages means we’re treated like dirt.  And I don’t think that people should be treated like dirt,” said Rep. Patrick Kennedy, D, R.I.

“We need to have a social safety net in place, whether that’s minimum health care protections, or other items that will help people — unemployment insurance, for example.  Those are things that — no one’s questioning that.  But what we’re questioning is the artificial setting of a, a level of wage that really has — doesn’t have a relationship to the economy,” said Rep. Dave Camp, R, Mich.

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