A crescendo is building for raising the federal minimum wage by 107%, from $7.25 an hour to $15.00. To be against it, according to those who support such a move, is to favor inequality and unfairness – it is to show one’s Simon Legree side. The $7.25 wage has been in place for six years; so it is understandable why this tidal wave has been developing. But its implementation will have negative consequences that are surely unintentional. Some perspective is needed.
The income gap has widened during the six years since the recession ended in mid 2009. That fact has little to do with the minimum wage and a lot to do with government policies regarding taxes, regulation and interest rates. A front-page article in Saturday’s New York Times detailed the gloomy news. While employers have added 200,000 jobs a month and the official jobless rate is at a post-recession low of 5.3%, the labor participation rate (62.6%) is at the lowest level since the Carter years. Six years into economic recovery there are fifteen million Americans on Social Security disability insurance, more than when the recession ended. Forty percent more people are on food stamps than six years ago. Work requirements, which were part of the 1996 Personal Responsibility and Work Opportunity Act, were waived in 2012 by the U.S. Department of Health and Human Services. And for the first time in the nation’s history, or at least during a time of economic recovery, more small businesses are closing than opening. And now government wants to fuel this fire by mandating a doubling of the minimum wage?