The editors at Bloomberg View have called for an increase in the minimum wage. Last week James Galbraith repeated his proposal to raise the minimum wage to $12 per hour. A large increase in the federally mandated wage would be devastating to less skilled and inexperienced workers. Galbraith and the editors at Bloomberg View would like to see higher wages and incomes for workers at the bottom of the income distribution. Merely requiring less educated and inexperienced workers to be more expensive makes a bad situation worse. These workers would benefit instead from education and training that would make them more valuable to employers.
The nearly 40% increase in the minimum wage between 2007 and 2009, combined with the deep recession of 2008-2009, destroyed many jobs for younger workers. The following chart compares the change in the percentage of the population that is employed, by age group, before and after the recession and minimum wage increases of 2007-2009. Teen age workers had the biggest decline in employment relative to population, followed by workers age 20 to 24. Fewer workers age 25 and above are directly impacted by the federal minimum wage of $7.25 per hour, and these workers were impacted less by the recession.
Galbraith’s proposal to raise the minimum wage to $12, or Senator Tom Harkin’s (D-Iowa), proposal to raise the federal minimum wage to $9.80 per hour by 2014, will make it much more difficult for new labor force entrants to find jobs.
Galbraith’s CNN op-ed, as well as his article in Foreign Policy, credits Ron Unz of the American Conservative with the proposal for a $12 minimum wage. Unz supports a policy that would reduce demand for immigrant labor, slow immigration from Mexico and Central America, and benefit conservative political candidates. This is a cynical reason for supporting a federal mandate that will destroy jobs for the most economically vulnerable workers. It mirrors the arguments in support of a federal minimum wage in the 1930’s made by Senators from higher wage Northern states. Ron Unz knows that a $12 minimum wage will reduce the employment of Latinos just as Senators from New England knew that the FLSA would reduce employment in Southern factories.
It is understandable that politicians might support a minimum wage that reduces demand for less skilled workers but benefits their constituents and supporters. It is more puzzling that Bloomberg View and economist James Galbraith support a policy that destroys job opportunities for workers still suffering from the 2008-2009 recession.