- The Washington Times - Wednesday, March 23, 2005

Sens. Edward Kennedy, Massachusetts Democrat, and Rick Santorum, Pennsylvania Republican, both introduced proposals to increase the minimum wage from $5.15 an hour.

Mr. Kennedy’s proposal would have raised the minimum wage to $7.25 in three steps over 26 months, while Mr. Santorum’s would have raised it to $6.25 in two steps over 18 months. Two weeks ago, both measures failed Senate passage.

Mr. Kennedy said, “I believe that anyone who works 40 hours a week, 52 weeks a year, should not live in poverty in the richest country in the world,” after telling fellow senators minimum wage workers earn $5,000 below the poverty line for a family of three. Mr. Santorum said, “I feel very comfortable that our proposal keeps the balance between the ability of lower-skilled employees to enter the work force at a wage in which they are compensated for the skills they bring to the job.”

The idea minimum wage legislation is an anti-poverty tool is simply sheer nonsense. Were it an anti-poverty weapon, we might save loads of foreign aid expenditures simply by advising legislators in the world’s poorest countries, such as Haiti, Bangladesh and Ethiopia, to legislate higher minimum wages. Even applied to the United States, there’s little evidence suggesting minimum wage increases help the poor. Plus, according to the Bureau of Labor Statistics, only 2.2 percent of working adults earn the minimum wage.

The crucial question for any policy is not its intentions but its effects. One effect is readily seen by looking at it from an employer’s point of view and asking: If I must pay $6.25 or $7.25 an hour to whomever I hire, does it make sense to hire a worker whose skills enable him to produce only $4 of value per hour? Most would see that as a losing proposition. Thus, minimum wages are a disincentive to hiring low-skilled workers.

Low-skilled workers are predominantly teenagers and lack adult maturity, skills and experience. Moreover, black teens often have grossly fraudulent educations, making them more lower-skilled.

Bureau of Labor Statistics unemployment data confirm the economic prediction about minimum wage effects. The teen unemployment rate is 16 percent for whites and 32 percent for blacks. In 1948, the unemployment rate for black teens (16-17) was lower (9.4 percent) than white teens (10.2 percent). Plus, black teens were more active in the labor force.

How might we explain that? How about arguing there was less racial discrimination in 1948, or black teens were then more highly educated than white teens? Of course, such arguments would be nonsense. While there was a minimum wage of 40 cents an hour before 1948, it had been essentially repealed by the post-World War II inflation. However, with successive minimum wage increases, black teen unemployment rose relatively to become permanently double that of white teens.

If the minimum wage law has these effects, how does it pass political muster? The current Social Security debate over private accounts gives us a hint. In the political arena, you dump on people who can’t dump back on you.

Few politicians owe their office to the youth vote. Despite the “concern for the children” malarkey, it’s voting-age adults to whom politicians are beholden. It turns out adults benefit from the discriminatory effects of minimum wages, and older adults benefit from Social Security intergenerational transfers.

Walter E. Williams is a professor of economics at George Mason University and a nationally syndicated columnist.

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