There Should Be No minimum Wage
Photo Credit: The Hinterland Gazette
In my article Racial Profiling Saves Black Lives, I posited the notion that lowering the minimum wage would help black youths gain employment. In response, Elizabeth Gonzalez from The HILL Chronicles asked, "... the minimum wage is already at poverty level, how much lower are you talking about?"
How much lower? Well, I think down to zero. That's right, the minimum wage should be zero dollars per hour. Before I explain why this would be good for teen employment, especially black teen employment, please read why current minimum wage laws have made teen unemployment unbearably high:
Wall Street Journal, 3 Oct 2009, Minimum Wage Increase Leads to Higher Teen Unemployment Rate
The minimum wage hike has driven the wages of teen employees down to $0.00.
Earlier this year, economist David Neumark of the University of California, Irvine, wrote on these pages that the 70-cent-an-hour increase in the minimum wage would cost some 300,000 jobs. Sure enough, the mandated increase to $7.25 took effect in July, and right on cue the August and September jobless numbers confirm the rapid disappearance of jobs for teenagers.
The September teen unemployment rate hit 25.9%, the highest rate since World War II and up from 23.8% in July. Some 330,000 teen jobs have vanished in two months. Hardest hit of all: black male teens, whose unemployment rate shot up to a catastrophic 50.4%. It was merely a terrible 39.2% in July.
Congress and the Obama Administration simply ignore the economic consensus that has long linked higher minimum wages with higher unemployment. Two years ago Mr. Neumark and William Wascher, a Federal Reserve economist, reviewed more than 100 academic studies on the impact of the minimum wage. They found "overwhelming" evidence that the least skilled and the young suffer a loss of employment when the minimum wage is increased.
A study by researchers at Stanford found that those who do not work as teenagers have lower long-term wages and employability even after 10 years. A high-wage society can only come by making workers more productive, and by destroying starter jobs the minimum wage may reduce long-term earnings.
If Congress won't suspend its recent minimum wage hike, it should at least create a teenage wage of $4 or $5 an hour to help put hundreds of thousands of teens back to work. White House chief economic adviser Larry Summers has endorsed this in the past. Without this change, expect the teen unemployment to remain very high for a long time.
The wonder of it all is that liberals still call "progressive" a policy that has driven the wages of hundreds of thousands of the lowest skilled workers down to $0.00.
When I was a child of seven I delivered the Newark Star Ledger to homes a few hours before school started and then after school I worked in my father's store selling socks and stockings. On the nights that my father's store closed at 6 pm I sold magazines door to door.
By the time I was ten years old I was selling greeting cards door to door that I bought wholesale from a mail-order company.
When I was twelve I was shining shoes on Saturdays to get money to buy comics or to go to the movies.
At age 17 I got a special child-labor exemption to work at a chemical company as a technician.
I'm leaving out dozens of other jobs I had as a child but I owe my current success to having had business experience at an early age. As the Wall Street Journal article points out, not having a job early in life consigns one to lower long-term earnings.
For Some Jobs even $5/hr is Too High
I have a number of businesses that could use dozens of employees but not at $7.25/hr. For example, I have certain products that could be listed on eBay but only if I could pay those doing the listing $4 an hour. The job requires taking photos, writing descriptions, packing the items after the auction and shipping the items. Because it is against the law to pay so little, I am forced to send these items to China where Chinese workers make the money that American teens could be making.
I do have other, higher priced products that do allow me to pay $7.25 an hour. In fact I sell hundreds of thousand dollars worth of those products on eBay annually. Some of my workers who started working at $7.25 an hour now make $12.00 an hour because they became more proficient at their job. However, if I had to initially pay 12 bucks an hour at their starting skill level I would have lost money and therefore would not have hired them to begin with.
So all those teens that could have started working for me at $4.00 an hour obviously never got to work at all and never graduated to $7 or even $12 bucks an hour. High minimum wages translates to $0.00 per hour for teens who don't have any jobs at all. I have no doubt that many of these teens will one day be in prison costing society tens of thousands of dollars a year because they never got jobs with people like me due to stupid, ridiculous minimum wage laws.
Starter jobs are just that - starter jobs. All those idiots clamoring for $12 an hour for stocking shelves at Walmart (1) will find out that such an absurdly high starting minimum wage will only result in $0.00 per hour when they don't have a starter job at all. They'll never become store-managers, regional managers, or anything better at all.
The Case for Unpaid Internship
Now let me give you an example of why the minimum wage should be zero.
My family has a business in which there are very few Americans skilled in the job we require and so we have to train them ourselves. Unfortunately only one out of every 4 people we train eventually have the ability to do the job and so it has become cost prohibitive to give them on-the-job training. We are currently in a half dozen mall locations but if it were legal to have unpaid interns, it would then be economical to train hundreds at a time and enable us to open up a few hundred stores within a year employing hundreds and hundreds of workers who will eventually earn $15 to $20 an hour, but labor laws makes it impossible for us to do so:
RealClearMarkets, 3 Jun 2010, Rising Minimum Wage, Rising Teen Unemployment
The Labor Department is throwing up yet another obstacle for youngsters who seek to occupy themselves by putting pressure on employers not to offer unpaid internships. Increasingly popular in recent years, internships give young adults experience that they use to get paying jobs in the future.
... the Labor Department has been making it harder for teens to get these unpaid, temporary positions, work which some employers later will value as experience. It has issued a new fact sheet describing circumstances under which students can work as interns. Among other criteria, the internship has to be "educational," whatever that means, and it must benefit the student and not benefit the employer.
These regulations are practically unworkable.
The purpose of starter jobs at low or no wages is not to feed a family or pay rent, rather the only purpose is to allow young people to get varied experiences under their belt. As an employer I am dismayed when I interview Americans for a job. Usually the only item on their resumes are college attendance - no jobs, no experience at working. When I interview foreigners for the same jobs I get reams of experience. If I had a choice between hiring a Ph.D. in computer science with no work experience or a young man who lists shining shoes, stocking shelves, flipping burgers, washing dishes and an unpaid summer internship at a computer company I would unhesitatingly hire the latter. I say this from years of hiring both the former and the latter. Nothing personal, but I have found in my experience that a college degree by itself is rather a useless, worthless thing. Many employers agree with me: half of recent college grads work at jobs for which their degree is worthless (2).
Almost all black teens have no job skills and the reason that so many are unemployed is that no employer is willing to pay even a few bucks an hour to train them. If liberals were genuinely concerned about young blacks getting jobs then they would write an exception into minimum wage laws to allow employers to hire black teens for zero dollars per hour (and please, no jokes about slave wages) so that they can gain some experience which will later earn them a living.
OUR Wal-Mart, a coalition including Wal-Mart workers, community organizers and the United Food & Commercial Workers organized day-long protests, urging Wal-Mart to pay full-time wages of $25,000 a year, or $12 an hour. It says many of Wal-Mart's 1.3 million associates are part-time employees averaging just $8.80 an hour.
Huffington Post, Half Of Recent College Grads Work Jobs That Don't Require A Degree
New research released Monday says nearly half of the nation’s recent college graduates work jobs that don’t require a degree.
Of 41.7 million working college graduates in 2010, about 48 percent of the class of 2010 work jobs that require less than a bachelor’s degree, and 38 percent of those polled didn’t even need high school diplomas, the report found. Authors Richard Vedder, Jonathan Robe and Christopher Denhart said that the country could be overeducating its citizens, and asked if too many public dollars are spent on producing graduates that the nation's economy doesn't need.