The proposal out of Washington to raise the minimum wage nearly 40 percent over the next two years — $7.25 to $10.10 and hour — is a redistributionist scheme that would aid some and devastate others.
While as many as 16.5 million workers currently are paid less than $10.10 an hour, according to the Congressional Budget Office, as many as 500,000 to 1 million would see their wages decline 100 percent, because they would lose their jobs. The CBO did not estimate how the subsequent increase in the cost of goods and services would hurt those on fixed incomes, such as retirees, or decrease the purchasing power of everyone.
The CBO, which is notorious for underestimating the costs of taxes and regulations, said the minimum wage hike would reduce the number of people living below the poverty threshold by 900,000, but did not project what the future poverty level would be due to inflation.
The CBO spelled out the redistributive nature of the proposal, estimating that households currently earning less than six times the poverty level would see their income increase $19 billion, while those earning more than six times the poverty level would lose $17 billion.
By Nevada law the minimum wage for those who do not receive workplace health insurance is a dollar higher than the federal minimum. How that would affect Nevada jobs is unclear, especially when you factor in the ever-changing ObamaCare mandates for certain employers to provide health insurance or pay a fine. That same CBO estimates ObamaCare will reduce hours worked over the next decade equivalent to 2.5 million full-time jobs.
Nevada’s senior Sen. Harry Reid was in Carson City this past week pressing for the minimum wage hike.
“Two-thirds of the people who get minimum wage are women,” Reid told reporters. “A majority of those women are supporting a family on that money. Someone who works 40 hours should not be listed as poor.” Where he gets his figures is anyone’s guess, since the CBO reported 56 percent of those earning the minimum wage are women.
Reid plans to bring the proposal before the Senate this month.
Nevada’s Sen. Dean Heller says he believes this is a state issue and should be decided on the state-level and that, ultimately, the most important debate is how to get Nevadans back to work as our state’s economy continues to struggle.
Congressman Steven Horsford has also come out strongly in favor of the minimum wage increase, saying, “During our country’s recovery from the recession, corporate profits skyrocketed and middle-class families and the working poor are now struggling to keep up. We need to ensure that all Americans have the opportunity to move up the economic ladder if they work hard enough; we must protect the American dream.”
A year ago, Rep. Mark Amdoei voted against adding an amendment to a job training bill that would have raised the federal minimum wage to $10.10.
Due to inflation, the real purchasing power of the current minimum wage is about the same as it was in the late 1960s, according to Pew Research. Raising the minimum wage may momentarily lift a few above the poverty line, but it will drive others into unemployment and onto welfare, possibly for life.
Most of those earning the minimum wage are younger workers. The unemployment rate for those under age 25 is already 16 percent, and that just accounts for those seeking a job. This proposal will doubtlessly increase that and dump untold numbers out of the labor force entirely. According to the American Enterprise Institute, when the minimum wage rose 41 percent between 2007 and 2009, the jobless rate for 16- to 19-year-olds increased by 10 percentage points, from about 16 percent in 2007 to more than 26 percent in 2009.
We call on our representatives in Washington to oppose raising the minimum wage. — TM