I don’t often have strong feelings about the minimum wage, but this article, Hidden Costs of the Minimum Wage, irked the hell out of me.
Economics Professor Casey Mulligan wants to cut the federal minimum wage, which he thought was a princely 7.55 per hour, but is actually 7.25 per hour. I’m guessing he has tenure, because those of us employed at will have already run the numbers in case we get laid off.
We [economists] agree that minimum wages do some economic damage, although reasonable economists sometimes believe that the damage can be offset and even outweighed by benefits.
More important, we agree that the extent of that damage increases with the gap between the minimum wage and the market wage that would prevail without the minimum. A $10 minimum wage does less damage in an economy in which market wages would have been $9 than it would in an economy in which market wages would have been $2.
What is the current market wage? From the comments section:
As any college student who is looking at internships knows, the current market wage is – – $0.00, whenever the employer can get away with it. This is a slack market, slack enough for employers to extract as much value for as little labor costs, as possible.
I read that most – but not all – minimum wage workers are students or other young people, many – but not all – living with their parents and many – but not all – working in service industries. Except for my first job, I’ve been well above minimum wage, so why should I worry about how much these workers earn? Because programs like the Earned Income Tax Credit, Medicaid and Food Stamps, funded by taxes, make up for some of what employers don’t pay.
Small government types want to take that tax support away with no corresponding increase in wages, and let the workers work for market wages – which you remember are just about zero – in a race to a third world economy. I don’t want to see that for both altruistic and selfish reasons. The selfish reasons are that while some of my clients are wealthy, they all sell to the middle class. If the middle class goes away, the hurt will eventually work its way around to me.
Back to what irked me:
But these are not normal times. The least-skilled workers are seeing their wages fall over time, largely because they are out of work and failing to acquire the skills that come with working.
What ivory tower is Mulligan inhabiting? Almost everyone’s wages are falling over time. As described in Hello From The Underclass, many of the people that are out of work have twenty years of skills, but are now considered too old to be employable. They can’t even get minimum wage jobs.
I’ve run out of unemployment benefits and still have no job. I’ve interviewed for many, averaging one or two a month. For some openings I’ve been invited back for multiple interviews, which probably means I was a finalist, but I invariably lose out, often to the dreaded “internal candidate”. Sometimes I get feedback from a potential employer. I’m told I interview well and have a good skill set. But apparently that’s no longer enough. At other times, I’ve been told I’m overqualified or underqualified. “We don’t hire people who aren’t employed” is my favorite.
Did I mention I’m 59 years old? … I had an interview for a contract position last Thursday. It pays less than half of what I typically have earned over the last decade, but that’s fine with me. It is income. I haven’t heard back from them yet. I dread calling the contract agency to see what the status is.
The NY Times recently cut its Green blog. Why are they keeping this one, again?