Steve Chapman

Not likely. Companies, unlike the government, can't create cash at will. Any money they give to workers has to be obtained by cutting jobs, reducing employee benefits or slashing other expenses that happen to be someone's income. Net stimulus: zero.

Besides eliminating minimum wage jobs, the increase stands to have another little-noticed effect: pushing people into jobs that pay even (SET ITAL) less (END ITAL). Some employees are exempt from the law, including those working in newspaper delivery, fishing and seasonal amusement parks, as well as staffers at companies with annual revenues of less than $500,000 a year.

Doesn't sound like a big group, does it? But in 2008, reports the Bureau of Labor Statistics, 1.94 million Americans were below the "minimum" wage -- compared to 286,000 getting the actual minimum. When the floor went unchanged for 10 years, the number of workers in sub-minimum jobs steadily declined. But in 2007, when the mandate went from $5.15 to $5.85, the total climbed by 14 percent, at a time when overall employment was stable.

That's not a coincidence. Economist Alan Reynolds of the libertarian Cato Institute in Washington has found that when the minimum wage went up in 1996 and 1997, the number of workers beneath the floor expanded by more than 75 percent -- even though the economy was booming. It looks like the minimum wage destroys some low-paying jobs and replaces them with lower-paying ones, to the detriment of the people who are supposed to benefit.

Economics punctures alluring myths about the sources of material improvement, which is why it is known as the "dismal science." But the victims of the minimum wage will find that the truly dismal thing about economics is what happens when you ignore it.


Steve Chapman

Steve Chapman is a columnist and editorial writer for the Chicago Tribune.
 

 
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