Raising the Minimum Wage Will Cost Many Their Jobs

The combination of low interest rates and artificially high wages favor the use of capital over the use of labor.

From letters to the editor, WSJ, 2-4-14. Excerpt:

"Government budgets are set by a process that generally doesn't include consideration of changes in the minimum wage. An example I would offer is the W.A. Franke College of Business at Northern Arizona University. For the 2013-14 academic year the college's budget includes $94,625 for student workers. We currently pay many of those student workers $7.90 per hour. If we assume they work 20 hours a week and 32 weeks a year (fall and spring semesters), that budget enables the college to employ 18.7 student workers. If the minimum wage were to rise to $10.10 per hour that number drops to 14.6. The college would have no real choice but to terminate four student workers following an increase in the minimum wage, a 22% reduction in student employment. If President Obama's proposed increase in the minimum wage paid to federal workers was applied to those currently employed, a similar scenario would play out across numerous federal agencies—providing stark and irrefutable evidence of the adverse impact of such a policy on employment opportunities for low-skilled workers.

Prof. Marc C. Chopin

Northern Arizona University

Flagstaff, Ariz"