Senator Tom Harkin of Iowa says that it’s “just goofy stuff” to suggest that raising the minimum wage will lead to more unemployment.
“That’s nuts. That’s just goofy stuff,” the Iowa Democrat said Friday, in answer to a question.
“It’s been estimated that by giving 28 million Americans this kind of a raise, that it will stimulate the economy, provide more jobs, and have GDP growth,” he countered.
Harkin co-sponsored a bill to raise the minimum wage to $10.10, which he said would bring it to just above the poverty level for a full-time worker.
There’s that word that people in D.C. love to use: estimated. These estimates were made by the Federal Reserve Bank of Chicago. You can download the document here. The estimate in the linked newsletter is flawed, in that it is a static projection that looks only at an increase in consumer spending that would result from an increase in the minimum wage. The paper doesn’t take into account any other effects, such as the the fact that it doesn’t make sense to hire someone who produces less than $10.10 per hour in benefits to your business. If the Marginal Benefit of hiring someone is less than the Marginal Cost of paying them, then they won’t be hired.
And it is interesting to note that the types of people who are making these estimates have no training in economics, like this English major who is now working as an Economic Analyst for the Economic Policy Institute.
And why stop at $10.10 per hour? If raising the minimum wage is so beneficial to the economy, then a larger raise should provide even larger benefits, should it not? Why not just raise the minimum wage to $25 per hour or more, Senator?
As far as my knowledge of this issue, I wrote three papers on the effects of the minimum wage on unemployment rates as part of my graduate studies in economics. All of the research proves that increases in the minimum wage cause increases in unemployment.
While looking at the chart above, you need to remember that the falling unemployment rate over the last two years is mainly due to people leaving the workforce and thus not being counted as unemployed, and not to these people actually finding a job.
Reason.com (unbelievable, this liberal site agrees with me!)
IHateEconomics (see, even the haters agree!)
And who actually gets hurt by increases in the minimum wage?
Unskilled youths between the ages of 16 and 24, that’s who. And the demographic group that experiences the most unemployment after the minimum wage is increased are black males between the ages of 16 and 19.
Mr. Harkin, what’s really goofy is how a
racist Senator from the Midwest can be so adamant about increasing unemployment among young black males…