Minimum Wage

That Time When Raising the Minimum Wage Cut the Number of Jobs

Boston Globe provides inadvertent economics lesson.


Fibonacci Blue, Flickr

The Boston Globe's writeup of a Massachusetts program to given low-income youth summer jobs explains in clear language why increases in the minimum wage that are not tied to overall increases in productivity or profits lead to fewer jobs.

The program provides money for YouthWorks, which pays the wages of 4,400 low-income teens in eligible cities who work for nonprofits or local government agencies in the summer. The Senate originally proposed the same funding amount as last year, $11.5 million. Level-funding actually means 600 fewer positions, though, because of the rise in the state's minimum-wage increase to $10 per hour this year and $11 per hour next year.

Maintaining the number of positions would take $13.34 million. But the compromise budget bill lawmakers filed Wednesday night included $10.2 million for the program, which translates into about 1,000 jobs lost.

The emphasis is in the original, which is taken from Tim Knighton of PJ Media's gloss on the story. Knighton continues:

Those who are fighting for an increased minimum wage ignore the simple economics of running a company. Businesses only have so much money available to pay people. The difference between YouthWorks and private business is that only one gets to vote on how much they have available.

More here.

Reason recently interview George Mason economics professor Don Boudreaux on "The Cruelty of the $15 Minimum Wage," which he says prices the least-skilled, most at-risk workers from entering and staying in the workforce.