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KENNEALLY: How Obama’s minimum wage proposal will kill jobs

Making labor more expensive never set off a recovery

- - Wednesday, February 20, 2013

President Obama's turns at self-congratulation during his State of the Union address last week might pass without notice, if he hadn't advertised our "economic recovery." When he took office in January 2009, the unemployment rate had reached a limping 7.9 percent. Now, four years and more than $1 trillion in stimulus spending later, it's a much cheerier 7.8 percent. That number swells to 14.4 percent when you include those who have been looking for work for so long they've given up, no longer full of the audacity of hope.

In a spirit of progressive innovation, Mr. Obama has looked back to 1938 to find his grand response to our jobs crisis: raising the minimum wage. In overwrought rhetoric meant to evoke images of Dust Bowl depression, he lamented the fact that a "family with two kids that earns the minimum wage still lives below the poverty line." Increasing the minimum wage is such a powerful tool it "could mean the difference between groceries and the food bank, rent or eviction, scraping by or finally getting ahead." It's a strange curiosity that Mr. Obama has waited so long to unveil this transformative economic mechanism.

Is Mr. Obama's dramatic depiction of American squalor accurate? No, not even close. Contrary to the Dickensian hyperbole, most of the working poor already earn more than the minimum wage. In fact, less than 1 percent of all working Americans fall below that income threshold, and the majority of them are above the poverty line. In fact, raising the minimum wage affects only a minuscule portion of Americans.

Moreover, approximately 60 percent of that population work part time, and more than half of them are younger than 25. The majority of these jobs are temporary positions held by younger people looking to make a little extra income, not parents desperately trying to keep their families afloat.

History shows that lifting the minimum wage inflicts more harm than it alleviates. The predictable consequence of forcing small businesses to pay more for labor than the market can bear will be significant layoffs. These layoffs will disproportionately affect young people, especially young blacks, already battered by our nation's chronic joblessness. Mr. Obama sold his proposal as a boon to employers: "For businesses across the country, it would mean customers with more money in their pockets." What it means is fewer employees working more hours for less.

As with any governmental encroachment into the private sector, good yet uninformed intentions lead to unintended consequences. Not only does increasing the minimum wage dampen job creation, it also has a tendency to propel an increase in the high school dropout rate, as higher wages for jobs typically reserved for younger workers entice teens to leave school prematurely.

Consistently, Mr. Obama has promised to stimulate employment while raising the cost of labor. It is already the case that the onerous requirements of Obamacare have made hiring needlessly expensive. Now, in a fit of fiscal incomprehension, Mr. Obama's response to our stubborn job deficit is to find a way to raise those costs even more. You don't have to be an economic guru to understand that making a commodity more expensive is not a way to entice more buyers.

Any government-determined minimum wage is a restriction on the liberty of employers and employees to arrive at a mutual, contractual agreement. Under Mr. Obama's plan, a small business couldn't hire a college student to work for $8 an hour, even if both parties agreed to the arrangement.

Despite acknowledging that the "American people don't expect government to solve every problem," Mr. Obama offers only governmental solutions to the problems he addresses. He seems much more interested in flexing the muscle of centralized bureaucracy than in designing pragmatic plans that produce results.

We now have 47 million Americans on food stamps, about equal to the entire population of Spain. At a time when the country is starved for genuine economic statesmanship, Mr. Obama delivers only stale statism -- and an argument for why we should be grateful for it.

Ivan Kenneally is editor-in-chief of Dailywitness.com.