Ross Wrong on Minimum Wage

Posted on March 08, 2013

Instead of digging up a statement from the National Association of Manufacturers from the 1930s, Andrew S. Ross (“Good timing in push to lift minimum wage,” Business, March 6) should have paid attention to recent history. A lot has happened since the 1930s – we cured polio, put a man on the moon, and discovered that the minimum wage has a harmful effect on jobs.

For instance, a study by David Neumark (UC Irvine) and William Wascher (Federal Reserve) found that 85 percent of the most credible economic studies on the minimum wage from the past two decades point to job loss after a increase.

It’s not hard to understand why this consensus exists. Businesses that hire entry-level employees and pay them minimum wage, or the tipped wage restaurants or grocery stores, for example, keep 2-3 cents in profit from each sales dollar, and can’t just absorb the increase.

Raising prices on cost-conscious customers isn’t an option, because sales fall as a result. Businesses are instead forced to provide the same service at a lower cost – meaning more self-service and fewer job opportunities for the same people that the wage increase is intended to help.

Unlike Ross’ argument, this isn’t simply a matter for historians — it’s a fact.

Michael Saltsman, research director, Employment Policies Institute, Washington, D.C.