The myth of a minimum wage

Gil Levitan

Gil Levitan

William Hopper, Contributing Writer

In the midst of the Great Depression, President Franklin Roosevelt established the first national minimum wage. It was part of the New Deal, enacted when he signed the Fair Labor Standards Act of 1938 (FLSA). This law guaranteed workers “the minimum standard of living necessary for health, efficiency, and general well-being.” As inflation has taken its effect, the federal minimum wage has been raised several times, with the current minimum being $7.25 per hour. However, some current political leaders believe this wage is too low to sustain oneself. They call for a “living wage,” with some, such as Senator Bernie Sanders, advocating for a $15 per hour minimum wage.

There is no doubt that some workers benefit from an increased minimum salary. Workers who do not lose their jobs, do get a raise. But a higher minimum wage increases unemployment among the most marginalized workers. In his 2015 paper Employment Effects of the Minimum Wages, University of California economist David Neumark found a striking relationship between increases in the minimum wage and teenage unemployment. Neumark’s research shows, for example, that if California were to raise its minimum wage from $10 dollars per hour to $15, it would reduce employment for teenagers by six percent in the short run, and 13.5 percent in the long run. Teenagers have, on average, less experience and fewer skills than other workers. Employers may be willing to hire teenagers at lower wages, but when wages are set at higher values, it is no longer profitable to hire an inexperienced teenager.

It is not just teenagers who suffer, however. Any worker who is disadvantaged, either because of race, gender, or socioeconomic circumstances, could be adversely affected by the minimum wage being raised. The marginalized only have one tool to compete with more privileged workers: they can offer to work for less. An increased minimum wage means that disadvantaged workers have to compete with the more skilled workers at higher wages. If they had gotten the job, they would have acquired on-the-job training and other skills needed to attain higher-paying jobs. Instead, they are trapped in a cycle of poverty and unemployment, while privileged workers enjoy less competition and higher wages. Thus, the advantage some workers gain from a higher minimum wage is based upon the disadvantage of other workers. So next time you vote for a candidate who supports raising the minimum wage, ask yourself: who are you really helping?

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