A new article in the Wall Street Journal- “Mandating Unemployment”, takes a look at the ways in which the minimum wage increase will potentially affect those getting paid at the low end of the pay scale. The article suggests, amongst other things, that the higher minimum wage during the recession is actually hurtful to low-income workers, and will work to raise unemployment at this time.
The article explores the reality of the minimum wage raise, which while long overdue, could actually put more people out of jobs. The rate increase will actually make it harder for employers to pay their employees, and cut jobs in response to the raise.
The logic in the article is that an employee making the old minimum wage will be eligible for earned income tax credits at their pay rate that would effectively raise their wages to around 10 dollars an hour. On the other hand, the cuts that employers will make in response to the wage hike will only slow hiring, and explores the idea that a person making ten dollars an hour with earned income tax credits is much better off than the individual who would have no income following a lost job.
This article underscores the difficult nature of trying to provide employees with a sustainable, living wage with the harsh realities of the current economic market. What’s your take on the new minimum wage increases- boon to lower income employees or shooting the economy in the foot?