Economists have consistently argued that the very existence of a minimum wage reduces employment opportunities for low wage workers. A small business, for example, may have work that needs to be done but cant afford to hire a minimum wage worker; that is one less job that will be offered and, perhaps, willingly taken. Recent research has supported this contention (Turner, 1999).
Reduction of poverty is the crux of any argument for enacting a minimum wage, and yet in the 72 years since the first minimum wage was created in the U.S., poverty rates have not been substantially reduced (Joint Economic Committee, 1995). Instead, the existence of a minimum wage has been shown to offer opportunities for a few as they use entry-level employment as a stepping stone (Kersey, 2004), while at the same time negatively impacting some of the socio-economic groups most in need of assistance in the U.S. To wit, a synthesis of 50 years of research on the minimum wage draws the following conclusions: the minimum wage disproportionately hurts African-Americans, low-wage regions (such as the South), unskilled workers, and the young (Joint Economic Committee, 1995).
Teenagers are of particular interest, not only because so many of them enter the workforce at minimum wage, but also because their trajectories as they age may be studied. Research suggests that “higher minimum wages have significant negative effects on the employment prospects of less skilled teens, losses which are masked by their replacement in the workforce by more highly skilled teens. In addition, increases in the minimum wage are associated with an earlier age for leaving school.” (Neumark, 1995) Thus, even at the earliest stages of employment, the minimum wage is seen to favor more highly skilled workers at the direct expense of the very people it is designed to protect. The minimum wage is also shown to discourage education, since the promise of a livable wage is enticing enough for teens that they may opt to drop out of school and work instead.
Over time, un-educated teenagers are less likely to earn more money or achieve success in the labor market beyond entry-level, minimum wage work. The minimum wage, then, encourages teenagers to drop out of school and work at the same time as it weeds out the less skilled from even those entry-level opportunities. Conclusion Minimum wage law as passed in 1938 was considered landmark legislation that was part of the New Deal. It was heralded as representing a new chapter in America, where even the lowest income groups would be protected and supported. Certainly the idea makes intuitive sense: promising those vulnerable groups at least a basic standard to guide their earnings would allow minimum wage earners to make a living and eventually work their way out of poverty. But in the nearly 70 years since the law was passed, those results have not been seen. Even regular increases to the amount of the minimum wage havent resolved fundamental problems with the impacts of the law. The research is consistent: “The most negative minimum wage employment effects are felt by at-risk groups, such as the less-skilled and young minority males.” (Neumark, 2007, p. 2). If minimum wage was enacted specifically to protect the very at-risk groups it has been shown to harm, then it must be judged a failure. References Fair Labor Standards Act. (1938). P.L 75-718. Joint Economic Committee, Congress of the United States. (1995). 50 Years of Research on the Minimum Wage. Washington, D.C. Kersey, Paul. (2004). The Economic Effects of the Minimum Wage. Testimony before the House of Representatives; Small Business Committee; Subcommittee on Workforce, Empowerment, and Government Programs. Krugman, Paul. 2009. Would cutting the minimum wage raise employment? The New York Times. December 16th. Op-Ed. Neumark, David. (1995). Effects of Minimum Wages on Teenage Employment, Enrollment and Idleness. Retrieved from: