Jobs Bill's Minimum Wage Would Hurt Black Teens

Friday, 12 Mar 2010 10:05 AM

By Richard Rahn and Izzy Santa

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
Congress believes it has the solution to America’s epidemic of joblessness: a so-called jobs bill whose centerpiece is a tax credit for companies that hire one of the 15 million unemployed.

Many legislators from the Congressional Black Caucus criticize the bill for not going far enough. And they are right. It doesn’t remove one of the many factors that have caused higher unemployment: a government-imposed minimum wage.

Today, black unemployment is almost 16 percent and at a 25-year high, even as the overall unemployment rate declined from 10 percent to 9.7 percent.

The recession has been the most damaging to teenage black males, whose unemployment rate is 44.9 percent, up from 39.2 when the minimum wage hike took effect in July. In fact, November — five months after the wage hike — saw unemployment for this demographic reach 57.1 percent—the second-highest rate on record at the Bureau of Labor Statistics.

Three years ago, then-Sen. Barack Obama and prominent African-American organizations thought a hike in the minimum wage would empower minorities.

So how much should workers be paid? $100 an hour? $25 an hour? $7.25 an hour (the current federal rate)? Or zero? For 95 percent of workers, a wage of a $100 an hour would be a significant raise. But most people understand that very few people would have jobs at a minimum wage of $100 an hour — so there are few, if any, advocates for that rate.

After a nine-year battle, when July’s increase in the minimum wage took effect, the Democratic Policy Council declared, “This was a long overdue raise for American workers.” Maybe for some workers, but the 3 million blacks now unemployed are feeling the pain.

The minimum wage hike has cost employers more, an additional $2.10 an hour, and forced employers to lay off many minimum-wage workers — most of them young people who had their first real job, causing an overall rise in black unemployment.

Think back to when you were a teenager who needed, or wanted, some extra cash. Would you have been better off not getting a job at the set minimum wage, or would you have been better off getting a job at 20 percent less than the minimum wage at the time? It’s hard to argue that no job is better than a lesser-paying job.

These alarming unemployment figures have prompted the Congressional Black Caucus and others who advocated higher wages to fix their first mistake by asking the president and Congress to develop a job creation plan that targets areas of chronic unemployment.

Congress’ latest jobs proposal, however, completely undermines the argument for a higher minimum wage. The logic for the tax credit is that, if labor becomes cheaper, by way of a credit subsidy, businesses will hire more people. The cognitive dissonance on display is astounding.

Employers will hire more workers of any given experience and skill level when the cost of doing so is lower. The fact is, few people stay at the minimum wage for very long. Once they learn basic job skills — showing up on time, working hard, and the mechanics of the job they are doing — their value to their employers increases, which is reflected in higher wages.

It is unconscionable that these young people with relatively few skills are prevented from being productive members of society because politicians choose to ignore basic economics. The fastest and most straightforward way to empower minorities and reduce unemployment is to end the imposition of mandatory minimum wages at levels well above what the market can afford.

But, as is the case all too often in Washington, politics trumps rational argument and true compassion.

In 1968, weeks before Martin Luther King Jr.’s death, the civil rights leader proclaimed: “If a man doesn’t have a job or an income, he has neither life nor liberty nor the possibility for the pursuit of happiness. He merely exists.”

In this case, the ones merely existing are the most disadvantaged, in particular, black male teenagers who pay the price with their forcible exclusion from the workforce.

Richard W. Rahn is a senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth. Izzy Santa is an adjunct researcher at the Center for Freedom and Prosperity.


-

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Christie Continues to Stoke 2016 Rumors

Tuesday, 21 Oct 2014 18:26 PM

Referring to himself as "a mercenary," New Jersey Gov. Chris Christie said Tuesday he "will think about" running for pre . . .

New York Congressman's Trial Put Off Until 2015

Tuesday, 21 Oct 2014 17:59 PM

A New York congressman's tax evasion trial has been put off until next year.U.S. District Judge Pamela Chen told lawyers . . .

Hillary: Dems Must Get Out and Vote in Midterms

Tuesday, 21 Oct 2014 17:03 PM

Hillary Clinton, in a passionately political speech, accused Republicans of national "amnesia" about failed GOP policies . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved