Minimum wage hike leads to job losses

Posted on August 12, 2009

Dear Editor,

Federal politicians’ “feel-good” rhetoric—most recently via the July 24th minimum wage increase—merely reinforces policies that result in unemployment for entry-level workers, especially in a weak economy (“Keeping prosperity around the corner,” 7/29).

Decades of economic research predicted that there would be an increase in job losses following minimum wage hikes, particularly among vulnerable groups like minority teens and adults without a high school diploma.

As a result of the federal wage hike, a business with 20 entry-level employees will have to absorb almost $30,000 in new labor costs (not including wage increases employers are likely to pay employees making near the minimum wage)!

Implementing the most recent increase in labor prices without any regard for current economic conditions forces employers to cut hours and eliminate some jobs entirely.

The federal unemployment rate has increased 62 percent from July 2008 to July 2009. Wage hikes that are meant to help struggling workers actually have the opposite effect of pushing vulnerable workers out of the job market. For working Americans—especially vulnerable entry-level workers—a lower minimum wage is much better than none at all.

Kristen Lopez Eastlick, Senior Economic Analyst

Employment Policies Institute

Washington, D.C.