Cutting wages won’t create jobs

Those scratching their heads at the connection between teen unemployment, Amanda Bynes, and the minimum wage shouldn’t worry: the billboard is nothing more than a transparent attempt to link a celebrity’s name and profile to a corporate-backed campaign against raising the minimum wage. In fact, until last week, the same billboard displayed an image of Justin Bieber expressing concern over the alleged effects of raising the minimum wage – until lawyers for Justin Bieber issued a cease and desist order against the Employment Policies Institute, the restaurant industry-funded group who paid for the billboard.

The over-the-top nature of this stunt is perhaps not surprising, as momentum for raising the minimum wage has grown significantly over the course of this year. Last March, Congressional leaders introduced the Fair Minimum Wage Act of 2013, which would raise the federal minimum wage from the current level of $7.25 per hour to $10.10 per hour and index it to keep pace with inflation. President Obama spent the past month calling for a federal minimum wage increase as part of a major national economic policy tour, and recent polling confirms that over 70 percent of voters in the U.S. continue to support raising the minimum wage.

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With few supporters on their side, restaurant industry advocates are now appealing to outdated myths about the impact of raising the minimum wage, in order to justify their campaign to block a long-overdue increase.
 
The historical record already shows that cutting the minimum wage will not improve job prospects for teens. The federal minimum wage remained unchanged for ten years from 1997 to 2007, and over that time it lost over 22 percent of its purchasing power as the cost of living continued to rise – yet, even with the minimum wage effectively decreasing in real terms, teen employment continued to drop steadily over this period. If cutting the minimum wage for ten years in a row did not boost teen employment when we tried it before, why would we expect anything different today?

The truth is that a wide range of factors explains the frustratingly high levels of teen unemployment today. As the Baby Boomers have begun to retire over the past decade, teens have faced increased competition from older workers looking for part-time jobs to help cover basic expenses. Furthermore, federal funding for summer jobs programs for young workers has declined substantially over the past decade, leaving teens with even fewer opportunities for gaining access to the labor market.

Lower wages will not reverse any of these factors that contribute to high teen unemployment. And given that adults over the age of twenty make up more than 90 percent of all low-paid workers who would benefit from raising the minimum wage in the first place, letting the minimum wage lose value year after year would simply undermine the economic security of workers of all ages, many of whom are trying to support families and raise children on poverty-level wages.

In reality, raising the minimum wage is a critical priority for boosting earnings and generating the economic growth needed to expand opportunity for all of America’s workers. If the federal minimum wage were increased to $10.10 per hour, more than 30 million low-paid workers in the U.S. would receive a raise, and this increased spending power would generate more than $32 billion in new economic growth, providing an important stimulus as the economy continues to slowly recover from the recession. And with McDonalds, Walmart, and other major fast food and retail chains earning record profits today, it’s clear that the country’s large low-wage employers could readily afford a minimum wage increase.

More than likely, a substantial share of the commuters that drive down West Pico Boulevard each day are headed to a job in retail, food service, or any one of the millions of low-wage service sector jobs that make up a significant share of the U.S. economy today. A billboard with a former pop star’s image might attract attention, but for anyone who understands the challenge of making ends meet on flat wages, the suggestion that raising the minimum wage would in any way limit economic opportunity simply doesn’t pass the laugh test.


Temple is a policy analyst at the National Employment Law Project in Washington, D.C.

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