Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at intelligent and rational individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

"Observe that the 'haves' are those who have freedom, and that it is freedom that the 'have-nots' have not." Ayn Rand

"The virtue involved in helping those one loves is not 'selflessness' or 'sacrifice', but integrity." Ayn Rand

05 March 2010

Democrats Eat the Young: Minimum Wage Case in Point

One of the popular political idiocies of our day is the idea that minimum wage laws accomplish something good.  Apparently, many people think that if the minimum wage is raised, then workers with minimal skills or unproven skills will simply be paid more money.  The idea is that employers, who are imagined to have more money than the low skilled workers they might hire, will be happy to transfer some of their wealth to such a low skilled worker because of a government mandate on minimal pay.  Actually, it is apparent if you put yourself in the shoes of the struggling small business owner who hires most people that this will mean that riskier bets that someone is productive enough to justify the higher wage will never be given a job offer.  It is also apparent that if someone is given a chance, they will be fired very quickly if they prove unable to quickly become sufficiently productive. 

The sad thing is that most people making minimum wages are essentially in training so that they can become more productive and justify being paid a higher wage.  When the minimum wage is increased by law, fewer workers are accepted for training.  This is not rocket science.  This is really easy to figure out.  You pretty much have to be a Democrat and a Progressive to be so dense that you cannot figure this out.  Hmm... or is it that even they can figure it out, but they shut their eyes to the evil they do because they are so beholden to the labor union leaders?

The primary unskilled or risky group seeking jobs is teenagers.  So it is reasonable to expect that there will be a strong relationship between teenage unemployment and the minimum wage.  There is:
This plot comes from an article in the Wall Street Journal of 5 March 2010.  The blog CARPE DIEM presents the WSJ comments and discusses the issue further in an intelligent evaluation.

One of the interesting things this plots shows is that while the while each increase in the minimum wage results in an increase in teenage unemployment, that increase does not always shoot up instantaneously with the increase.  The rate of rise in the teenage unemployment rate does go up faster as the wage increase becomes greater relative to the average teenager's productivity.  The first wage increase was followed a bit slowly by the teenage unemployment rate.  Why would this be?  I expect it is because the teenagers already being paid the prior minimum wage amount in your employ have already acquired much of the skill or proven themselves sufficiently that they have already acquired most or all of the skills needed to be productive enough at the new wage level.  Rather than let them go, you will simply be more reluctant to hire the next trainee.  This means that the unemployment rate does not necessarily shoot up immediately.  But, our most recent minimum wage increase to $7.25 per hour does appear to have an immediate response in teenage unemployment.  This many be due the fact that very few teenage workers are productive enough to justify the $7.25/hour wage.  More actual firings took place at this compensation level.  This third increase in only a few years was to a level far too high for many teenage working neophytes to match with their productivity.


Micha Elyi said...

I call it Jacobs' Law.

   When the minimum wage goes up,
   so do the "self-service" signs.

   "Raising the Minimum Wage
   Puts Jobs Out Of Reach"
   by Joanne Jacobs,
   San Jose Mercury News
   February 19, 1987

Yes, she's this Joanne Jacobs.

Charles R. Anderson, Ph.D. said...

Thanks for your comment Micha. I checked out Joanne Jacobs' weblog. She has a strong interest in improving teaching and schools, apparently with at least a somewhat libertarian outlook.

The public schools are another matter of Democrat influence on government policy devouring our children. The lack of professional teaching and the use of government-run schools to spread propaganda favoring ever-expanded government is the most important problem in public policy in the United States. Government control of the schools is perpetuating the growth of government and everywhere converting governments into tyrannies. The young are so thoroughly indoctrinated in the idea that any injustice is to be addressed by government and that any inequality is an injustice, that it takes 15 years of working in the real world before most young people begin to have ideas fairly independent of those they were indoctrinated with in schools. Those who graduated from college and those who did graduate studies are usually even more badly indoctrinated than most.

Anonymous said...

Interesting chart. Was there anything else going on between 2008 and 2010 which may have contributed to rising teenage unemployment?


Charles R. Anderson, Ph.D. said...

Imposing a minimum wage increase upon the Great Socialist Recession was idiotic in the extreme. To be sure, when it was voted to raise the minimum wage they did not foresee the severe recession. Once the recession was underway, a no-brainer response would have been to have rescinded the minimum wage increase which could only make unemployment worse for teenagers than most. What is more, hiring lower paid workers helps some companies and makes it easier to survive a recession and keep higher paid workers employed.