Wednesday, July 27, 2016

Need a striking example of why a 107% increase in the federal minimum wage to $15 an hour is a bad idea?

See The Fight for $15 Will Hit North Philly Hard: Not far from Democrats’ soiree, teen unemployment is at 42%. What if the minimum wage doubles? by Mark J. Perry and Michael Saltsman in the WSJ. Excerpts:
"If delegates to the Democratic convention in Philadelphia this week need a striking example of why a 107% increase in the federal minimum wage to $15 an hour is a bad idea, they need only travel a few miles north of the city’s convention center on Broad Street.

In the heart of North Philadelphia—represented by ZIP Codes 19121, 19122, 19132 and 19133—the unemployment rate for teenagers averages 42%, according to 2014 data (the most recent available) from the Census Bureau’s American Community Survey. The employment rate for teens residing in these ZIP Codes is an astonishingly low 14%—only one in seven has a job. (Nationwide, roughly one in three teens is employed.) Young adults in North Philadelphia ages 20 to 24 don’t fare much better: Their jobless rate averages 28%.

The city’s north side faces these crisis-level rates of youth joblessness with a starting wage—$7.25 an hour—that’s consistent with the historical inflation-adjusted average minimum wage in the U.S. of $7.40. If anything, the current minimum wage is too high, given the large numbers of unemployed youths who can’t find a job. The consequences of more than doubling it to $15 an hour would be disastrous.

By significantly reducing the available stock of job opportunities at the bottom end of the career ladder, a higher minimum wage increases the likelihood that unemployed teens will seek income elsewhere. A 2013 study by economists at Boston College analyzed increases in state and federal minimum-wage levels between 1997 and 2010. It found that low-skill workers affected by minimum-wage hikes were more likely to lose their jobs, become idle and commit crime. The authors warn that their results “point to the dangers both to the individual and to society from policies that restrict the already limited employment options of this group.”"

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