The lead editorial in the print edition of today's New York Times advocates (for the umpteenth time) for an increase in the Federal minimum wage.
Will Congress finally raise the federal minimum wage this year? It would be the least that lawmakers could do.
Although the editorial gives the level of the current Federal minimum wage as $7.25 per hour, it nowhere says what the new appropriate level should be. Is it $8? How about $10, or even $20?
If you follow the minimum wage debate, you will know that there are two sides, which argue inconsistent economic theories. Those favoring increases believe that the government can order employers to pay higher wages, and they will do so without adverse consequences (such as hiring fewer workers). The New York Times is firmly in this camp. "It would be the least lawmakers could do." In other words, it's just a pure gift from Congress to the low income people. No adverse consequences, or even potential adverse consequences, are mentioned in the editorial. The Times can't even think of any reason why this is not a good idea.
Those opposing increases argue that they cause a decrease in demand for low wage workers. Some workers get a slightly higher wage, while others end up unemployed. Causing higher rates of unemployment among hard-to-employ kids, particularly members of minority groups, is not something to be taken lightly.
Which is it? Although the New York Times declines even to mention any potential negative effects of an increase in the minimum wage, I don't think they believe there are none. If there were no adverse consequences to raising the minimum wage, then why is the minimum wage under $10 per hour? Why not $100 per hour, or $1000 per hour? The $1000 per hour level sounds good to me. At around 2000 hours of work per year, that would come to $2 million. Even I could live on that, here in high cost Manhattan. Why wouldn't that be "the least that lawmakers could do"?
Of course, even the New York Times would recognize that at a $1000 per hour minimum wage, all of their employees except the top couple of executives would be illegal, and they couldn't hire the staff to get out a paper. Clearly that wouldn't work. So at $1000 per hour the minimum wage is destructive, but according to the Times, at levels under $10 per hour it has no adverse consequences at all. Then there must be some level at which the crossover from free money to destructiveness occurs. Where is that crossover: $11? $15? $20? $100? Of course they don't address this question, and I don't think they even have a theory to address it. If you agree that a minimum wage is destructive at $1000 per hour, and you can't specify a point of crossover, don't you have to agree that the minimum wage is destructive at all levels?
One way that an increase in the minimum wage could be non-destructive would be if there was full employment, or even a labor shortage, among young people. Of course, if there were a labor shortage among young people, wouldn't their wages be moving up on their own without a minimum wage at all? Anyway, how's it going with youth employment? According to this article from Reuters, reporting on a study from the Annie E. Casey Foundation,
Americans aged 16 to 24 are increasingly leaving school and unable to find a job, causing the largest youth unemployment rate since World War II.
Hmmm. Another possibility is that the minimum wage is already too high.