"Moreover, as employers are forced to pay low-skilled workers a higher wage, they are less likely to hire such workers. Citing a study by Michigan State University's David Neumark, Horowitz writes that a living wage set at 50 percent above the minimum wage increases the average wage for workers in the bottom tenth on the pay scale by 3.5 percent. However, the same wage increase reduces the...
Contemporary Quotes on Minimum and Living Wage
"I also have tried very hard not just to generate jobs but to help people who are working hard for less. That's why we expanded the earned-income tax credit, and I've asked Congress to expand it again. ... And that's why, with bipartisan support in 1996, we raised the minimum wage to $5.15 an hour, over 2 years. And now it's time to do it again, to $6.15 an hour.
We have bipartisan support again in Congress, but once again, the Republican leadership is trying to stop us. They know they can't win on the facts. Back in 1996—listen to what was said the last time we tried to raise the minimum wage. In 1996, Republican leaders said that a higher minimum wage, and I quote, 'was a job killer cloaked in kindness.' They warned that it would throw young minorities out of work and lead to—listen to this—a juvenile crime wave of epic proportions.
Time has not been kind to their predictions. ... Today I release a report from the National Economic Council that puts to rest any of the lingering myths about the minimum wage. Since the minimum wage was raised in 1996, our economy has created over 10 million new jobs. The unemployment rate is at its lowest point in 30 years. The employment of minority youth has gone up. Juvenile crime has gone down. We now have the lowest poverty rates in 20 years and the lowest African-American and Hispanic unemployment rates ever recorded. We've cut the welfare rolls in half. And, thanks in part to the minimum wage increase, millions have moved from welfare to work, and incomes for even the poorest Americans are rising for the first time in decades."
"Living wage advocates often point to a study by economists David Card and Alan Krueger, which claims that raising the minimum wage does not reduce employment. This research became prominent during the Clinton years, in part because Krueger was once chief economist in Clinton's Labor Department.
Although Card and Krueger are reputable economists, equally reputable economists have attacked their data, methods, and results.
Meanwhile, most research on the minimum wage finds that it reduces employment. Emphasizing the Card-Krueger evidence is like a doctor prescribing a drug relying on a single controversial study that finds no adverse side effects, while ignoring the many reports of debilitating results."
"At the time the minimum wage legislation was enacted, the nation had been in the Great Depression for nearly a decade; 1938 was the eighth consecutive year of double-digit unemployment. Although there were several ostensible objectives behind the legislative impetus to enact the minimum wage law, first and foremost it was an attempt to reduce poverty in the United States. Using current federal poverty definitions, about one-half of the American population was in poverty at the time the legislation was implemented. ... By increasing the wages of some of the nation’s working poor, it was expected that some individuals would be lifted out of poverty."
"In the modern world in which laborers often receive fringe benefits from employment as well as on-the-job training, the imposition of a minimum wage can lead to reductions in these nonwage expenses of employers. ... If an employer is forced to pay a wage higher than what market conditions dictate, fringe benefit payments not subject to the minimum wage law may be reduced. Such reductions could include ending or reducing health insurance payments, or forcing the worker to pay for parking. Although it pays to train workers whose contributions to the firm equal or exceed their wage, when that is no longer the case (e.g., when the minimum wage exceeds the marginal product of labor), the firm may abandon both the hiring of new workers or the providing of training for them that might be transferable to other jobs."
"However defined, the American evidence is clear that raising minimum wages does not reduce poverty. That holds true using different definitions of poverty; evaluating different age, racial and gender groups within the broader population; using different geographic areas, using different samples (e.g., cross-sectional vs. time-series data) and using different independent variables to control for other factors that impact poverty. Many things affect poverty, such as the magnitude of unemployment in particular, but also the overall level of income, the prevalence of transfer payments, the existence of single-parent families and so forth. Public policy would be better directed toward changing these other variables rather than the minimum wage if the goal is to reduce the amount of poverty in the United States."
"The study concludes that a living wage one and a half times the minimum wage would raise the average wages of the lowest tenth of income earners by 3.5 percent. That is, it would increase total earnings for the group and, as a result, slightly decrease the likelihood of families having an income below the poverty line.
That is hardly a ringing success. After all, it simply means that the unintended consequences of living wage laws, such as increased unemployment of low-wage workers, are not so large that they totally undermine the intent of the policy, so that there are actually some gains, on average, to low-income earners. "
"This case is in one respect very much like public housing. In both, the people who are helped are visible – the people whose wages are raised; the people who occupy the publicly built units. The people who are hurt are anonymous and their problem is not clearly connected to its cause: the people who join the ranks of the unemployed or, more likely, are never employed in particular activities because of the existence of the minimum wage and are driven to even less remunerative activities or to the relief rolls; the people who are pressed ever closer together in the spreading slums that seem to be rather a sign of the need for more public housing than a consequence of the existing public housing.
A large part of the support for minimum wage laws comes not from disinterested men of good will but from interested parties. For example, northern trade unions and northern firms threatened by southern competition favor minimum wage laws to reduce the competition from the South."
"This is bad news for cities. The living wage poses a big threat to their economic health, because the costs and restrictions it imposes on the private sector will destroy jobs —especially low-wage jobs — and send businesses fleeing to other locales. Worse still, the living-wage movement’s agenda doesn’t end with forcing private employers to increase wages. It includes opposing privatization schemes, strong-arming companies into accepting employee unions, and other economic policies equally harmful to urban health."
"Decades of research have shown that the minimum wage harms the least-skilled workers from poor families while heavily benefiting young workers from middle-income households. Several studies critical of the living wage come to similar conclusions. The main beneficiaries of the living wage are public-sector unionized employees because of the reduced incentives for local governments to contract out work. Instead of exploiting grievances of the marginally employed against 'greedy' employers, advocates for the poor should focus their energies on building the skills of the poor."
"According to Horowitz, living wage laws as of 2002 directly affected only 1 percent or so of employees in the communities that have enacted such laws. Those who benefit the most are young workers and public-sector unionized employees. Living wage laws not only reduce the incentives for local governments to contract work out, but they also increase the bargaining power of the employee unions."
"The latest verbal coup of the left is the phrase 'a living wage.' Who is so hard-hearted or mean-spirited that they do not want people to be able to make enough money to live on? Unfortunately, the effort and talent that the left puts into coining great phrases is seldom put into facts or analysis."
"Remuneration is the most important means for achieving justice in work relationships. The 'just wage is the legitimate fruit of work'. They commit grave injustice who refuse to pay a just wage or who do not give it in due time and in proportion to the work done (cf. Lv 19:13; Dt 24:14-15; Jas 5:4). A salary is the instrument that permits the labourer to gain access to the goods of the earth. 'Remuneration for labour is to be such that man may be furnished the means to cultivate worthily his own material, social, cultural, and spiritual life and that of his dependents, in view of the function and productiveness of each one, the conditions of the factory or workshop, and the common good'. The simple agreement between employee and employer with regard to the amount of pay to be received is not sufficient for the agreed-upon salary to qualify as a 'just wage', because a just wage 'must not be below the level of subsistence' of the worker: natural justice precedes and is above the freedom of the contract.
The economic well-being of a country is not measured exclusively by the quantity of goods it produces but also by taking into account the manner in which they are produced and the level of equity in the distribution of income, which should allow everyone access to what is necessary for their personal development and perfection. An equitable distribution of income is to be sought on the basis of criteria not merely of commutative justice but also of social justice that is, considering, beyond the objective value of the work rendered, the human dignity of the subjects who perform it. Authentic economic well-being is pursued also by means of suitable social policies for the redistribution of income which, taking general conditions into account, look at merit as well as at the need of each citizen."
"But what of the able-bodied worker who 'can’t find a job'? This situation cannot obtain. In those cases, of course, where a worker insists on a certain type of job or a certain minimum wage rate, he may well remain 'unemployed.' But he does so only of his own volition and on his own responsibility. ... If a worker can withdraw from the labor market by insisting on a certain type of work or location of work, he can also withdraw by insisting on a certain minimum wage payment."
"The crucial point is that the unions insist on a minimum wage rate higher than what would be achieved for the given labor factor without the union. By doing so, ... they necessarily cut the number of men whom the employer can hire. Ergo, the consequence of their policy is to restrict the supply of labor, while at the same time they can piously maintain that they are inclusive and democratic, in contrast to the snobbish 'aristocrats' of craft unionism."
"The principles of maximum and minimum price control apply to any prices, whatever they may be: of consumers’ goods, capital goods, land or labor services, or, as we have seen, the 'price' of money in terms of other goods. They apply, for example, to minimum wage laws. When a minimum wage law is effective, i.e., where it imposes a wage above the market value of a grade of labor (above the laborer’s discounted marginal value product), the supply of labor services exceeds the demand, and the 'unsold surplus' of labor services means involuntary mass unemployment. Selective, as opposed to general, minimum wage rates, create unemployment in particular industries and tend to perpetuate these pockets by attracting labor to the higher rates. Labor is eventually forced to enter less remunerative, less value-productive lines. This analysis applies whether the minimum wage is imposed by the State or by a labor union."
"Thus, one effect of minimum wages is that of discriminating against the employment of low-skilled workers.
For the most part, teenagers dominate the low-skilled worker category. They lack the maturity, skills and experience of adults. Black teenagers not only share those characteristics, but they are additionally burdened by grossly fraudulent education, making them even lower skilled.
Bureau of Labor Statistics unemployment data confirms the economic prediction about minimum wage effects. Currently, the teen unemployment rate is 16 percent for whites and 32 percent for blacks. In 1948, the unemployment rate for black teens (16-17) was lower (9.4 percent) than white teens (10.2 percent). Plus, black teens were more active in the labor force.
How might we explain that? How about arguing that there was less racial discrimination in 1948, or back then black teens were more highly educated than white teens? Of course, such arguments would be nonsense. The fact of the matter is that while there was a minimum wage of 40 cents an hour prior to 1948, it had been essentially repealed by the post-World War II inflation; however, with successive increases in the minimum wage, black teen unemployment rose relative to white teens to where it has become permanently double that of white teens.
If the minimum wage law has these effects, then how does it pass political muster?"
"The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from 'taking jobs' from white construction workers by working for lower wages. It was not meant to protect black workers from 'exploitation' but to protect white workers from competition.
Even aside from a racial context, minimum wage laws in countries around the world protect higher-paid workers from the competition of lower paid workers.
Often the higher-paid workers are older, more experienced, more skilled or more unionized. But many goods and services can be produced with either many lower skilled workers or fewer higher skilled workers, as well as with more capital and less labor or vice-versa. Employers' choices depend on the relative costs.
The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive -- thereby pricing many of them out of jobs. Large disparities in unemployment rates between the young and the mature, the skilled and the unskilled, and between different racial groups have been common consequences of minimum wage laws."
"The idea that legislators can help low-income workers simply by mandating a pay raise is the height of hubris. While the minimum-wage rhetoric may sound good, the reality is quite different. Forcing employers to pay low-skilled workers a higher than market wage — in the absence of any changes in productivity — will decrease the number of workers hired (the law of demand).
The National Federation of Independent Business estimates that if the federal minimum wage is increased to $6.65 per hour, nearly 217,000 workers would lose their jobs. The long-run consequences would be even more severe, as employers introduced labor-saving equipment and technology."
"Economic freedom, not minimum-wage socialism, is the key to reducing poverty, as China is learning. If legislators really want to help the poor, the best thing they can do is abolish, not increase, the minimum wage.
In America, the majority of low-income earners typically move up the income ladder by improving themselves, not because of the minimum wage."
"Another area where we can work together is the minimum wage. I support the proposed $2.10 increase in the minimum wage over a 2-year period. I believe we should do it in a way that does not punish the millions of small businesses that are creating most of the new jobs in our country. So I support pairing it with targeted tax and regulatory relief to help these small businesses stay competitive and to help keep our economy growing. I look forward to working with Republicans and Democrats to help both small-business owners and workers, when Congress convenes in January."
"In a free society, employers should have the right to hire and fire workers and to pay them wages that are mutually agreed upon, and workers should have the right to freely compete for jobs and, thus, to accept employment at mutually beneficial wage rates. A worker's minimum acceptable hourly wage, of course, will depend on his or her next best alternative employment opportunity and, hence, on the value of his or her productivity in the marketplace.
Arbitrarily increasing the legal minimum wage simply increases the price of labor without changing a worker's skill level or other conditions that lead to low wages. Congress cannot repeal the law of demand by a stroke of the legislative pen. When the real (inflation-adjusted) minimum wage rises above the prevailing market wage for unskilled workers, employers will cut back on hours, reduce benefits, and introduce labor-saving methods of production. This is common sense."
"(a) The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers
(1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States;
(2) burdens commerce and the free flow of goods in commerce;
(3) constitutes an unfair method of competition in commerce;
(4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and
(5) interferes with the orderly and fair marketing of goods in commerce."
"Since the Earned Income Tax Credit lifts nearly 5 million Americans out of poverty each year, I’ll double the number of workers who receive it and triple the benefit for minimum wage workers. And I won’t wait another ten years to raise the minimum wage – I’ll guarantee that it keeps pace with inflation every single year so that it’s not just a minimum wage, but a living wage. Because that’s the change that working Americans need."
"Such losses are hard to see, but they are widespread. One company closes because it can't afford to pay higher wages. Another decides to produce its product with fewer workers, and another never expands. Perhaps most importantly, there's the business that never opens. The people who were never hired don't complain—they wouldn't know whom to blame—they don't even know that they were harmed. They are the unseen victims."
"Ultimately, a living wage in Athens (or anywhere) will actually hurt the poor rather than helping them. It will decrease production, increase counterproductive activity for the least skilled, and increase prices for the entire population. Cities like Athens should encourage work instead, by minimizing regulations on labor and allowing everyone's standard of living to increase with unadulterated production."
"The most common concern I hear when discussing the possibility of eliminating the minimum wage is that companies will be able to get together and gang up on their employees, forcing them to accept wages of nearly nothing. This sounds plausible, but it leaves out two key points: employees are not 'forced' to work at a specific place, and competition between businesses will automatically lead to different wages (not just between companies, but within the company as well)."
"Although it's not as common, many people are also concerned that eliminating the minimum wage, currently at $7.25 on the federal level, would drop wages across the board by an equal amount. Someone making $20/hour, the theory goes, will quickly see their wage drop to $12.75. The error in this thinking, however, is that the minimum wage is not a price floor for all wages — just for those that would be less in the absence of regulation. A person making $20/hour won't see a change in his or her pay if the minimum wage is decreased because the company isn't basing his or her wage on the minimum wage to begin with. Job descriptions don't list salaries of '$10 higher than minimum wage,' for example.
The only salaries that would be affected would be those that are already overpriced, namely jobs utilizing unskilled labor. Just as not all products are worth paying $7.25 to receive, not all jobs are worth paying $7.25 to have someone complete."
"The final argument, that citizens should not be treated so poorly as to receive a wage of $7.24, is not based on economics but on the moral standing of those in favor of minimum wages. They believe that a resident of the most powerful country in the world should not have to worry about living comfortably. While I agree that basic services should be provided to those in need, who administers these services is a major question. Those that are pro–minimum wage believe that the government should be the one granting assistance, in the form of artificial wage rates. Governments are hardly the only ones able to aid the poor and destitute."
"Any employer who violates the provisions of section 206 [Minimum Wage] or section 207 [Maximum Hours] of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages."