Let states set their own minimum wage?

Washington Examiner Editorial:
"Since the last time this Congress raised the minimum wage," President Obama said during his State of the Union address, "19 states have chosen to bump theirs even higher. Tonight, let's declare that, in the wealthiest nation on Earth, no one who works full time should have to live in poverty -- and raise the federal minimum wage to $9 an hour."

The only thing surprising about Obama's call for a higher minimum wage is that it took him so long to make it. The chairman of Obama's White House Council of Economic Advisers, Alan Krueger, is the co-author of a paper, legendary among liberals, purporting to show that minimum-wage increases had no effect on unemployment in two California and New Jersey counties. In fact, Krueger argued, government wage controls are great for businesses. They increase demand for goods and services, force business owners to rethink their business models, increase worker productivity, and decrease employee turnover. By his reckoning, it's a win-win-win.

But if Krueger is right, then how come Washington is the only state with a minimum wage higher than Obama's $9 mark? If a higher minimum wage doesn't hurt employment and helps businesses, then why haven't the 14 states where Democrats control the legislatures and governors' mansions raised their minimum wage to $10 or even $15?

Conservatives, of course, have a slightly different understanding of the issue. They believe there is no such thing as a free lunch and that a a higher minimum wage will cause businesses to reduce their labor costs by eliminating jobs.

As The Washington Examiner's Philip Klein noted Thursday, economists David Neumark and William Wascher not only performed an extensive literature review that confirmed this view, they even went back and obtained more detailed data from the counties Krueger had examined. They determined that he simply got his facts wrong. Unemployment did, in fact, go up when the minimum wage was raised.
Even within states wages vary according to the scarcity of workers.  In the oil fields of West and South Texas and North Dakota workers in fast food restaurants get more than double the minimum wage because that what it takes to hire someone.  In areas where employment is not scarce entry level workers are still having trouble finding jobs at any price.  Employers are not going to hire people if they lose money by doing so.  In those cases it becomes just another unfunded mandate.


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