Een recent artikel van Art Garden in Forbes legt dit nog eens goed uit.
We vinden het artikel, en het advies, zo belangrijk, dat we niet de tijd willen nemen om het te vertalen.
Scrap the Minimum Wage
By: Art Carden, 09.13.10,
Do you want to get serious about expanding employment? Then it’s time to realize that spending on jobs programs is the wrong approach. It would be much better to eliminate hurdles for people who want to find work. One of those hurdles is the minimum wage.
The effect of a minimum wage is a classic example of the law of unintended consequences. Minimum wages create unemployment:
At above-market prices people want to supply more labor than employers wish to hire. Repealing the minimum wage would have two effects.
First, it would create job opportunities, particularly for teenagers, and the chance to acquire experience today that can translate into higher future earnings.
Second, it would send a powerful message to employers, employees and investors that they can hire and invest without fear of punishment.
The unemployment burden falls mostly on young workers and people with few skills. The minimum wage affects a lot of employees under age 25, who constitute about half of the minimum wage workforce. Nineteen percent of teenagers who received hourly wages earned the minimum wage or (by dint of working in agriculture or a family business) less than that minimum. Only 2% of full-time hourly workers earn the minimum wage or less. The minimum wage, in other words, makes youngsters unemployable, but it also reduces the ability of older, full-time breadwinners to support a family.
Between 2007 and 2009 the federal minimum wage increased by 41%, from $5.15 an hour to $7.25 an hour. The consequences have been disastrous: According to the Employment Policies Institute in Washington, D.C., approximately 98,000 jobs–a 6.9% reduction in employment among 16- to 19-year-old workers in the states affected by all three stages of the federal minimum wage hike–have been lost. Broadening coverage to the 32 states that were affected by some portion of the increase, the three-stage minimum wage hike cost 114,000 teen jobs.
You can see the effect in official employment data. The latest government stats show an unemployment rate of 9.7% among adult males and 7.9% among adult females. The teenage unemployment rate, however, is 26%. Unemployment for black teens is 40%. July’s “underemployment rate,” which includes discouraged workers and part-time workers who would like to have full-time work, is 16.5%. (Gallup puts it at 18.4%.) Removing labor market hurdles will reduce these numbers.
The 2007–09 minimum wage increase had large effects on many states in the South and the Great Plains. Recent data suggest that the two-year wage increase reduced teen employment in Tennessee by 8.2% (6,365 jobs). Reversing the federal minimum wage boost (or repealing it altogether) will create new job opportunities for teenagers in these regions; similar job growth in the Northeast, Midwest and West Coast would require repealing higher state-level minimum wages.
Eliminating the minimum wage would send a powerful and positive economic message. It would show investors, entrepreneurs and employees that policymakers appreciate the laws of supply and demand–and that prosperity comes from harnessing production, not redistributing wealth.
Even a low-wage job in most cases beats no job and no wages. Supporters of the minimum wage argue that earning at least $7.25 an hour makes a statement about the kind of society we live in. Unfortunately, that statement amounts to: “We don’t understand how competitive markets work.” Minimum wage advocates might mean well, but people without jobs can’t buy food, clothing and shelter with others’ good intentions.
Repealing the minimum wage can create permanent increases in employment and wealth. We can’t say the same about government spending programs.
Take one small example. The feds just made available a $300,000 grant to the city of Hartselle, Ala. That money is earmarked to help build a Cracker Barrel restaurant. The money is supposed to create up to 200 jobs. Not counted in this job creation number: the jobs lost at other restaurants when Cracker Barrel takes away their customers.
Uncle Sam’s programs aren’t going to create permanent increases in economic activity–or stimulate the creation of jobs with much staying power. At best, they’ll reshuffle resources and create temporary increases in employment in some sectors at the expense of others. Initiatives like these also encourage people to invest in political skills to pry loose government money. That effort consumes resources, but it produces no wealth.
Politicians can’t be expected to understand the laws of economics. Eliminating the minimum wage would spur employers to hire more people. But taking credit for a new road-paving project makes a better photo op.
Art Carden is assistant professor of economics and business at Rhodes College in Memphis, Tenn.
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Geplakt uit <www.forbes.com>