How To Stifle a Recovery: Raise the Minimum Wage

by Sal on July 28, 2009

in Economy,Politics

With economic indicators predicting that the economy is starting to show signs of recovery, one would think that we are nearing the end of this national nightmare of an economic disaster.  Yet last Friday, a Democrat government policy went into effect that could cause some of the recent stabilization of the economy to backslide.   Friday saw the minimum wage increase 11%, from $6.55 per hour to $7.25 per hour.  While this may seem trivial to some, to a small business owner it is not.  When aggregated across multiple salaries, as well as the taxes that have to be paid on top of the minimum wage, it will cause small business owners (and frankly, large corporations) to cut labor costs even more than they already do.  So while the U.S. may see some modest GDP growth over the next quarter or two, the labor market will continue to decline as businesses are faced with increased labor costs.

The endless minimum wage debate is a straw-man argument.  The wage itself is not enough to live on, and most people who are on the minimum wage are teenagers and part-time employees with second jobs.  So in reality, this increase will do little to help families and people in need.  Yet its enactment during this time of high unemployment and economic distress will have far-reaching consequences on our economy, and take a bad unemployment situation and make it even worse.

H/T: Instapundit

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