Acton Institute Powerblog

The President’s $9 Path to Increasing Minority and Teen Unemployment

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During the State of the Union address President Obama suggested that having a minium wage was a moral issue. In the speech he said:

not-hiring2Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong. That’s why, since the last time this Congress raised the minimum wage, nineteen states have chosen to bump theirs even higher.

The President believes that it is a moral wrong for any full-time worker, regardless of what the job is, how much the job is worth, etc., should be able establish a home for a family of four. To solve this problem the President announced:

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 $9.00 an hour. This single step would raise the incomes of millions of working families. . . . For businesses across the country, it would mean customers with more money in their pockets. In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while CEO pay has never been higher. So here’s an idea that Governor Romney and I actually agreed on last year: let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.

I probably sound like a broken record, beating the same drum, but if you were a minority or teenager raising the minimum wage to $9 per hour is not what you wanted to hear. Here’s why as I stated back in 2006:

Such an increase actually hurts teens and low-skilled minorities in the long run because minimum wage jobs are usually entry-level positions filled by employees with limited work experience and few job skills. When the government forces employers to pay their workers more than a job’s productivity demands, employers, in order to stay in business, generally respond by hiring fewer hours of low-skill labor. Low-skill workers become too expensive to employ, creating a new army of permanent part-timers.

Forced government wage increases are supported when people forget that the money used to cover the increase does not magically materialize. It must come from somewhere. Since Americans love the best products for the lowest prices, businesses will not likely pass the cost of the wage increase on to consumers in the form of higher prices. They will, instead, reduce their costs by laying off workers with the lowest skills, relocating the jobs (or the entire business) to another country, or skirting the law altogether by paying employees “under the table” or by hiring illegal immigrants.

Americans need to ask themselves a serious question: how does raising the minimum wage encourage business owners to take risks on unskilled labor? In fact, the minimum wage was never seen as a basis for socio-economic mobility. That is, government set wages were intended to be a temporary safety net, not a way of life. If the President wants to make the minimum wage a moral issue by saying that it’s “wrong” for the minimum wage not to sustain a family of four why, then, is it not also “wrong” to put business owners in a position where they will need to lay-off employees, reduce hours, and not take risks to hire unskilled workers, and so on, in order to fund the arbitrary wage increase? It seems that before we raise the minimum wage all Americans, including the Obama administration, would do well to read F.A. Harper’s book “Why Wages Rise.

Harper would recommend that President Obama raise wages by letting prices do what they do. That is, we should primarily care about the “prohibitions on the rights of each person to work at a job of his choice—either for himself or for an employer who wants his labor—at a wage mutually satisfactory between them” (119). Finally, suggests Harper, the President should worry only about prohibitions on the spending of a person’s income for what he or she wants most, among things offered by others who have produced them from their own labors. In other words, the way to raise wages is to increase economic freedom.

Anthony Bradley Anthony Bradley, Ph.D. is Associate Professor of Theology and Ethics in the Public Service Program at The King's College in New York City and serves as a Research Fellow at the Acton Institute. Dr. Bradley lectures at colleges, universities, business organizations, conferences, and churches throughout the U.S. and abroad. His books include: Liberating Black Theology: The Bible and the Black Experience in America (2010),  Black and Tired: Essays on Race, Politics, Culture, and International Development (2011),  The Political Economy of Liberation: Thomas Sowell and James Cone of the Black Experience (2012), Keep Your Head Up: America's New Black Christian Leaders, Social Consciousness, and the Cosby Conversation (2012), Aliens in the Promised Land:  Why Minority Leadership Is Overlooked in White Christian Churches and Institutions (forthcoming, 2013). Dr. Bradley's writings on religious and cultural issues have been published in a variety of journals, including: the Atlanta Journal-Constitution, the Detroit News, and World Magazine. Dr. Bradley is called upon by members of the broadcast media for comment on current issues and has appeared C-SPAN, NPR, CNN/Headline News, and Fox News, among others. He studies and writes on issues of race in America, hip hop, youth culture, issues among African Americans, the American family, welfare, education, and modern slavery. From 2005-2009, Dr. Bradley was Assistant Professor of Systematic Theology and Ethics at Covenant Theological Seminary in St. Louis, MO where he also directed the Francis A. Schaeffer Institute.   Dr. Bradley holds Bachelor of Science in biological sciences from Clemson University, a Master of Divinity from Covenant Theological Seminary, and a Doctor of Philosophy degree from Westminster Theological Seminary.  Dr. Bradley also holds an M.A. in Ethics and Society at Fordham University.

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