Minimum Wage Or Maximum Opportunity
By Congressman Jeb Hensarling Posted in Congress | Congressional Contributors — Comments (45) / Email this page » / Leave a comment »
That summer, I decided to take my first steps into the real world. Eager to take on the responsibilities of adulthood (and more-so to get out of working in my father’s chicken farm) I took a job at the Holiday Inn in College Station. It was hardly glamorous, but I was happy to work for a few bucks.
I thought that my timing couldn’t have been better – not three weeks after taking that job the Federal Government decided to give little-ole’-me a wage increase. I couldn’t have been happier, I was going to make even more money. Though I was thrilled at the time, I would soon come to learn the unintended consequences a mandated federal wage increase would have on entry level workers like me.
Read on . . .
In this sound byte world of modern politics, there are some that would have you think that poor Americans needlessly struggle to raise their families simply because the wealthy are holding out on them. They would have you think, “if only Uncle Sam would raise the minimum wage, if only Uncle Sam would FORCE the rich to pay higher wages, then these people could move up in the world.” But as we know, sound byte politics often is remarkably different from real world facts. The truth is that more than half of minimum wage earners are young Americans. In fact, only 10-12 percent of people who earn the minimum wage are sole earners in households with children. Less than 1 in 5 workers earning the minimum wage live below the poverty line. More revealing, 29 states and Washington, D.C. have a wage rate higher than the federal minimum wage. To put it simply, the minimum wage only affects a small minority of Americans. Worse, those that are affected by wage increases are those most likely to be hurt by them, since they effectively cut off the bottom rung of the economic ladder. It penalizes those most in need by reducing their options – making it much more difficult to find a job to begin or continue a career. According to a survey conducted by the National Restaurant Association, after the last wage increase in 1996, 146,000 jobs were cut from payrolls and plans to hire an additional 106,000 employees were delayed. In a free-market society, it sure seems nonsensical to claim to be helping people by limiting their options (less employment due to higher wages). We can have maximum opportunity or minimum wages. We can’t have both. Nearly 9 out of 10 minimum wage jobs serve as a training program for young men and women just entering the workforce. We are fortunate that all over America, from Hawaii to Maine, small businesses pay people to train them, teach responsibility, and cultivate future industry leaders. As these young employees gain skills, their wages rise significantly. In fact, nearly 70% percent of minimum wage employees receive raises within the first year of employment. If raising the minimum wage will really help those most in need, why not raise it to $50 or even $100 per hour? The reason is because wage increases are counter productive in that they impede job creation by tying the hands of job creators. Ultimately, wage increases hurt the very people that they are designed to help. The real question is whether we should develop federal economic policy on political sound bytes, or on real life reality. According to Thomas Sowell, the overwhelming majority (approximately 85 percent) of economists in North America conclude that minimum wage laws reduce employment, particularly for the young and least experienced. I know that the free enterprise system is the greatest anti-poverty program ever devised. Sadly, for those Americans who are truly affected by the wage rate, economic prosperity and opportunity will remain a dream if their chance to grasp and move up the economic ladder is taken away – along with their shot at the American dream. In a nation as great as ours, how can we deny so many people maximum opportunity – their shot at the American Dream? I fear that these Americans may discover, as I did, that the real minimum wage in America is zero.