Big Labor Wins, Workers Lose Under Minimum Wage Hike

August 12, 2013

by James Wigderson
Special Guest Perspective for the MacIver Institute

Union organizers attempted a one-day strike among fast-food workers recently in Milwaukee, and elsewhere. Their goal, they claimed, was for the various fast food restaurants to pay a so-called “living wage” of $15 an hour, over double the current minimum wage of $7.25/hour.

Of course it would be great if everyone could start out in the world making $15 an hour. It would also be great if everyone could win the lottery.

But what the supporters of a “living wage” minimum wage fail to understand is that the minimum wage was not meant to be family supporting. It is entry-level pay for those just entering the workforce. With time and experience, a person’s ability to earn more allows them to take the next steps towards the American dream.

In fact, a higher minimum wage is actually hurting those at the economic bottom that groups like “Raise Up MKE” are claiming to help. According to research by the MacIver Institute last year, 7,109 more people are unemployed because of increases in the minimum wage since 2005.

It’s not hard to understand why. As the cost of labor increases the demand for labor decreases, and this is especially true for entry level and unskilled positions.

Ironically, leftwing magazine The Nation recently re-learned this valuable economic lesson, according to ProPublica. The magazine decided to actually pay their interns the minimum wage in an effort to be more “fair” instead of merely offering them stipends. They’re not even offering the “living wage” advocated for by the left, yet they are paying for this increase in wages by offering two less internships and requiring interns to take on more responsibilities.

The next time the Capital Times’ John Nichols lectures on a living wage, someone should ask him how it’s working out for The Nation where he writes.

The example of The Nation reminds us who is getting the minimum wage. This is not about raising families for the most part.

According to the Heritage Foundation, relatively few of minimum wage earners live below the poverty line. The average family income is over $53,000 a year, and just over half of the workers are between the ages of 16 and 24.

The older workers earning the minimum wage are admittedly not in the entry level category, but a significant number of them are supplementing the family income rather than being the sole source. Over half of them are working in part-time jobs and they have an average family income of $42,500 per year. According to the Heritage Foundation, 62 percent have incomes over 150 percent of the poverty line.

Of course, these numbers get lost in the coverage of picketers outside the local McDonalds and people walking off their jobs. Meanwhile, highly paid union organizers are content to either ignore the numbers or purposely avoid talking about how unemployment would actually go up with a higher minimum wage.

It’s also worth noting that while the $15 per hour demand is certainly higher than what the president has proposed, $9.00 per hour, the demands won’t end there. Massachusetts Senator Elizabeth Warren suggested earlier this year that the minimum wage should be $22 per hour, or triple the current wage. On their website, Raise Up MKE, using numbers from the Economic Policies Institute, claims that $50,967 per year ($24.50 an hour) is what a worker with a child needs in Milwaukee.

We might ask them why not $30 per hour, or $55 per hour?

We know the answer already. Employers would be unable to sustain such wages at the low end and the laws would hurt the very people the leftwing activist groups claim they’re trying to help.