Virginia Senator, Jim Webb, who co-sponsored The Fair Minimum Wage Act of 2007, which established the first federal minimum wage increase in ten years and has supported a wide range of job killing policies including raising tax rates on capital gains and dividends, and Obamacare, has now co-sponsored The Fair Minimum Wage Act of 2012 (S.3453). The proposed legislation Monday to raise the federal minimum wage from $7.25 to $9.80 over two years.
The one-term accidental Senator is, as Milton Friedman defined, a typical well intentioned sponsor. A do gooder that is acting as a front man for the special interests. Listen to the his well meaning, well intentioned justification for increasing the minimum wage;
“Lower income workers continue to get squeezed by stagnant wages and rising cost of living,” said Senator Webb. “In the age of globalization and outsourcing, the average American worker is seeing a different life and a troubling future. While corporate profits are at an all-time high, wages and salaries are at an all-time low as a percentage of GDP. Raising the minimum wage is an important step toward addressing this disparity.”
It all sounds great but the reality of his proposed paints a different picture. If we look beyond the law’s label to see what results the law produces. Since the 1950’s, when the Minimum wage laws were drastically increased, we have seen teenage unemployment rates increase substantially versus the overall unemployment rate and furthermore who have suffered most have been young black Americans. The current unemployment rate among black youth, ages 16-19, jumped a full 2.8 points, to 39.3 percent. That’s nearly double the 20.9 percent unemployment rate for whites in the same age demographic.
So instead of helping those lower income workers who Webb claims are being squeezed in the current economy, he is in effect, squeezing them out of the labor market. He is, as Friedman states, assuring that people whose skills are not sufficient to justify the increased minimum wage, will be unemployed.
As Friedman describes in this video, “There is absolutely no positive objective that is achieved by enacting minimum wage laws”
To reenforce the point listen in as Thomas Sowell and Walter E. Williams, two of economic academia’s most brilliant minds, discuss the destructive real world affects of increasing the minimum wage. As Sowell points out, “the real problem is that they don’t see these things in terms of trade-offs. They arbitrarily pick something that they call a good thing and they pay no attention to the cost of that good thing either in money or in terms of all the other good things that are going to be harmed by putting in whatever they happen to be in favor of.”