How liberals kill an economy…
In December of 2015, Minnesota boasted the nation’s fourth-lowest unemployment rate of 3.5%, as well as the nation’s fourth-best labor participation rate with 70% employment. The numbers show Minnesota as having a strong economy; however, the recent drastic minimum wage hike is likely to cause a lot of harm to the economy and employment prospects for a few reasons.
Supply and demand are the backbone of the American capitalist system and are vital to the national and state economies. Supply and demand also control labor. Harry Holzer, a Nonresident Senior Fellow in Economics at the Brookings Institute, wrote, “Many employers will be very reluctant to pay high wages to workers with modest skills.” It can be reasonably inferred that, historically, minimum wage positions exist for workers with minimum skills, experience, and education. As an individual furthers their education and experience, they can earn more money, thanks to the free and voluntary capitalist system. Holzer goes on to argue that “Many economists worry minimum wage increases tend to reduce employment, hurting young and less-educated workers the most” and also adding that “moderate minimum wage increases will lead to modest job losses.”
An Increase of $5.50 (58%) in the minimum wage in Minnesota is not a moderate increase by any means. It can be implied that the job losses to follow will be a much larger scale. According to a study published in the Industrial Labor Relations Journal, it was found that any 10% increase in minimum wage will be followed by a 1-2% decrease in employment for teens, and a 1.5-2.5% decrease in employment for young adults. This means that a 6-12% decrease in teen employment, and a 9-15% decrease in young adult employment should be expected. According to a study from Governing Magazine, 11% of young people between the ages of 16 and 24 are already unemployed, and a remarkable 18.6% of individuals ages 16-19 are unemployed. It can be expected that young people will likely suffer from an increase in the minimum wage, as their ability to find a job and play a role in the Minnesota economy will be stifled. People need to ask themselves if paying an uneducated worker $15 an hour to flip burgers is worth compromising the introduction of young future leaders and innovators into the workforce.
In addition to the catastrophic effects on young workers, many economists predict that an increase in minimum wage will lead directly to inflation, resulting in the purchasing power of an individual decreasing, and the value of money decreasing. Investopedia argues, “raising the minimum wage to an excessively high rate would exert inflationary pressure on the economy.” Raising the minimum wage is an artificial solution that can only lead to a drastic decrease in the value of money, especially when risen as dramatically as 58%.
It is important to understand the effects of having a $15 minimum wage, as well as the historical significance of such an event. This increase is unprecedented, given that the federal government has never increased the minimum wage by more than a dollar at a time, and no state has a minimum wage above $10.50.
Sources:
Alpha News MN – http://alphanewsmn.com/the-15-dollar-minimum-wage-effect/
Minimum-Wage.org – https://www.minimum-wage.org/minnesota
