Arizona has recently instituted a 30% raise in the minimum wage, and they are already beginning to see the effects:
Oh, for the days when Arizona's high school students could roll pizza dough, sweep up sticky floors in theaters or scoop ice cream without worrying about ballot initiatives affecting their earning power.
That's certainly not the case under the state's new minimum-wage law that went into effect last month.
Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they're cutting hours, instituting hiring freezes and laying off employees.
This stands to reason, of course. For a business that depends on minimum-wage labor, a 30% spike in costs can only result in efforts to reduce those costs. There is no magic way for a company, especially a small one, to spend that much more money and expect to stay in business.
(Unless, of course, they magically become 30% more profitable -- but if that were possible, wouldn't they have done so already? :)
What is especially pernicious about the minimum wage is that it is younger people being put out of work. Besides the social strains that come from young people being idle, this sort of unemployment delays a kid's ability to gain work experience for use later in life. A study by David Neumark indicates that the effect is measurable 10 years later:
The evidence indicates that even as individuals reach their late 20's, they work less and earn less the longer they were exposed to a higher minimum wage, especially as a teenager. The adverse longer-run effects of facing high minimum wages as a teenager are stronger for blacks.
Put bluntly, a higher minimum wage is a force toward perpetuating an underclass.
I don't dispute that there are beneficiaries of a higher minimum wage -- many Arizonans will see their wages rise by up to 30%. However, many peoples' wages will drop by approximately 100%, as jobs disappear. And those who are hurt in this way are the ones we will never hear about.
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How about a few more implications. Both Wal-Mart and CostCo have come out in favor of a higher federal minimum wage. Why would they do that? That is, besides scoring the obvious PR points...
Well, these companies already pay above the proposed minimum wage, for the most part, and so will not be affected in a major way by the change. The businesses they compete with -- Mom and Pops in myriad towns around the country -- often do. So a higher minimum wage really just puts weaker competitors in a more difficult position. Expect big-box dominance to accelerate after the federal mandate passes.
(Not that I object to the big-boxes, I think they provide a substantial net benefit to our standard of living. It's just that a feel-good idea like the minimum wage might not comport well with other ideological goals.)
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