As regular as clockwork, some people in government keep trying to boost the federally mandated minimum wage, despite significant evidence that such action actually hurts people on the lowest wage scale.
The Clinton administration reportedly is planning to ask Congress to hike the $4.25 minimum wage. Some in the administration are pushing for a $1 boost; the president may be ready to settle for less. The minimum wage was raised to $4.25 in 1991. It was boosted to $3.80 in 1990 and previously had been at $3.30 for about 10 years.But no matter what the level, any hike in the minimum wage has the biggest negative impact on people in entry-level jobs.
Studies have shown that raising the minimum wage shrinks the job market at the lower end of the pay scale and especially hurts teenagers looking for temporary work or startup employment. Most employers don't cut jobs if the minimum wage rises, but they do reconsider hiring new help and often decide to get along without as the costs get higher.
The standard argument is that higher minimum wages are needed to raise families out of poverty. Yet family income is seldom dependent on a minimum wage job. Most such jobs are the marginal type featuring young people. And anyone good enough to stay on the job very long is soon earning more than the minimum wage. Experience and competence count.
Another negative impact from raising the minimum wage is that it puts pressure on employers to raise all other wages in order to maintain the differential between starting salaries and other pay. That makes it even less attractive for employers to hire more people.
More disturbing is the proposal being pushed by Clinton's Labor Secretary Robert Reich to tie the minimum wage to inflation. Thus, the minimum wage would rise automatically as inflation rises - and put constant pressure on all other wages in the process.
That would only feed the fires of inflation, be an even stronger deterrent to creating new jobs and be a recipe for economic disaster for many small business firms. The big losers would be the very entry-level workers who social engineers want to "help."
The best answer is to leave the minimum wage alone.