Raising the minimum wage shuts more entry level workers out of the job market

Iain Murray:

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James M. Buchanan, Nobel Prize winner for economics in 1986, put it thus:

“Just as no physicist would claim that 'water runs uphill,’ no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests.”

The overwhelming majority of empirical studies into the effects of the minimum wage find that it erodes employment. In 2007, David Neumark of the University of California-Irvine and William Wascher of the Federal Reserve surveyed over 100 minimum wage studies published since the early 1990s. They discovered that over two-thirds of them found negative effects on employment, while only about an eighth found positive effects. Worse, those studies that focused on the low-skilled people including youths found particularly bad damage done.

Wascher and Irvine also looked at the quality of the studies. They found 33 studies that were robust to most criticisms, of which 28 found negative employment effects. (Notably, much of the evidence for positive employment effects in the larger sample came from the United Kingdom rather than the United States, and that those studies may have failed to account for complicating factors during the 1980s, when the UK had sector-specific minimum wages. But the more recent evidence from the UK’s introduction of a national minimum wage in 1997 mirrors the American evidence.)

The federal minimum wage was raised in 2007, and again in a couple of steps until 2009. There has been recent research into the effects of that increase. One study, by Aspen Gorry of the University of California-Santa Cruz, focuses on the effect on youth unemployment. He found that minimum wages effect unemployment, especially youth unemployment, “because they interact with a worker’s ability to gain job experience.” While the minimum wage increase pushed the general unemployment rate 0.8 of a percentage point higher over the study period (compounding the misery of the economic downturn), the unemployment rate for 15- to 24-year-olds surged by almost 3 percentage points.
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There is much more.

In France where the minimum wage is $12 an hour the youth unemployment rate is 24 percent.  It should be clear that raising the minimum wage is detrimental to young people trying to get a start in the job market and those hurt the most are black and Hispanic youths.  Why these same people support a minimum wage increase can only be attributed to  the failure of the education system to teach them basic economics.

It is a bad deal for them and it is an unfunded mandate for small business.