Minimum Wage Increase Results In Jobs Decrease?
Rep. Jesse Jackson Jr., D-Ill., wants to again raise the minimum wage -- from $7.25 to $10.00 -- despite an abundance of experience that doing so accomplishes exactly the opposite of what minimum wage advocates claim is their objective: to make low-income earners better off.
Why doesn't McDonald's increase the price of Big Macs if they want to sell more? It's pretty obvious that consumers will buy less of a product when its price goes up.
So why is it not equally obvious that consumers of labor -- employers -- will buy less labor if the price of that labor increases?
The data bear out this very simple logic. Increases in the minimum wage highly correspond with increases in unemployment for the young and unskilled.
University of Michigan economist Mark Perry has calculated that over the period of the last minimum wage increase -- increasing it from $5.15 in 2007 to $7.25 in 2009 -- teen unemployment increased 5 percentage points more than the general increase in unemployment over that period.