Minimum Wage Hikes Don’t Help

Posted on July 22, 2013

U.S. Rep. Gwen Moore’s heart may be in the right place on the minimum wage, but the evidence is clear that minimum wage hikes actually harm the people they’re supposed to help. (“Minimum wage raise urged,” July 16).

The economics aren’t tough to understand. Businesses that hire entry-level employees who earn the minimum wage — think restaurants or grocery stores — keep a few cents in profit from each sales dollar and can’t just absorb the cost of a mandated wage hike. Raising prices typically isn’t an option because higher prices mean fewer sales. That means employers are forced to do more with less — as in more customer self-service and fewer job opportunities for inexperienced employees, such as teens looking for their first summer job.

The evidence overwhelmingly backs up this intuition: Eighty-five percent of the credible economic research on the minimum wage from the last two decades points to job loss following a wage hike.