Musings on Minimum Wage

As a student trying to pay my way through school, I know I have been blessed to land a summer job at all, much less somewhere I am passionate about. Last year (2010), youth employment was lowest since 1949, having dropped 17.5% from the year before (2009). Interesting to note is that the minimum wage was last raised in the summer before, in 2008. Earlier in history, data from shows that at least 20,000 jobs were eliminated by the 1996 hike. This appears to be a pattern.

Minimum wage is definitely not the sole cause of the terrible unemployment numbers in the state today; the whole of Michigan has been suffering, especially after the collapse of the auto industry. The key to moving beyond failing industries is to support Michigan’s other businesses and encourage the establishment of new ones. When minimum wage is raised, the effects reach these businesses. Common summer employers, like farmers or resort owners, will readily admit to relying on the kids they employ in the summer to keep the business going. A higher minimum wage can discourage them from hiring too many employees or even be enough the shut them for good if they cannot afford the extra pay. 

Interestingly enough, Michigan is one of the few states which allow younger workers to be paid less than minimum wage. When a business is paying less, it is able to afford more workers. If less pay seems unfair, another beauty of a free market is the ability to walk away from a job if one doesn’t wish to live off its pay.

As a student, I am often willing to work cheaper. My younger brother who is looking for a job is willing to work for cheaper. I know students who have happily worked for a stipend less than minimum wage. I understand the importance of being able to support a family on a wage; this was the intent of the first wage law. However, I don’t think it would be all bad to have the freedom to choose to work for less if that is what it takes to be competitive and earn money for college.


One thought on “Musings on Minimum Wage

  1. Great post. For an interesting further read on the minimum wage I’d suggest this piece:

    which appeared last month in the Wall Street Journal. It is behind a paywall, so I’ll highlight two stats of particular salience. The miniumum wage most directly hurts low-wage earners as you mentioned, which in practice means a disproportionate amount of teenagers and minority groups.

    This about teen employment:

    “According to the study, 2010 was ‘the fifth consecutive year in which a new historic low for teen employment was reached.’ Based on the first three months of 2011, the center predicts that ‘only one of every four teens (16-19 years old) would be employed during the summer months of June, July, and August,’ which would represent the ‘lowest ever or second lowest ever summer employment rate for teens in post-WWII history.’”

    And this about black employment:

    “The effect on the black community is so pronounced, write the authors, that ‘employment losses for 16-to-24 year-old black males between 2007 and 2010 could have been nearly 50% lower had the federal and state minimum wages remained at the January 2007 level.’”

    These excerpts illustrate how many more people could potentially be employed right now if minimum wage laws were repealed. At the very least, our unemployment rate would certainly be sitting south of its current 9% threshold.

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