Friday, August 01, 2008

The Effects of Raising the Minimum Wage

The employment report today showed that the biggest jump in unemployment was in the 16-24 age group, up 0.8%. This group has lost 550,000 jobs in the last three months and the unemployment rate is up 2.4% during that time. The unemployment rate for those over age 25 is up by 0.5% during the same time.

Is it possible that raising the minimum wage had something to do with the rise in youth unemployment? Certainly the economic slowdown has had an effect on these workers and seperating out the part that is due to the rise in the minimum wage is probably impossible, but it seems logical that it has had an effect. I don't care if someone has a study that claims that raising the minimum wage has no effect on employment, common sense says it must have an effect. Businesses only have so much revenue to go around. Given a choice between hiring another slacker teenager and reducing owner profit or not hiring the slacker teenager, I think I know what choice the owner will make.

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