Richardcyoung.com

The Online Home of Author and Investor, Dick Young

The Job Destruction Act

By

U.S Congressman Robert C. “Bobby” Scott (D-VA) and U.S. Senator Patty Murray (D-WA) introduced the Raise the Wage Act on April 30. They promised that the bill would “raise wages for nearly 38 million American workers,” as well as phase out the subminimum tipped wage and index the minimum wage to median wage growth.

But as James A. Dorn, vice president of monetary studies at the Cato Institute, points out, the Raise the Wage Act is a feel good bill, rather than an effective way to reduce poverty or create jobs for low-skilled workers

The reality is that whenever wages are artificially pushed above competitive market levels jobs will be destroyed, unemployment will increase for lower-skilled workers, and those effects will be stronger in the long run than in the short run.  The least productive workers will be harmed the most as employers substitute new techniques that require fewer low-skilled workers.  There will be less full-time employment for those workers and their benefits will be cut over time.  That is the logic of the market price system.

In reality, raising the minimum wage would likely reduce employment opportunities, especially for black teens and low-skilled, entry level workers “for whom a job represents the first rungs on the ladder of opportunity.” Read more from Mr. Dorn here.

Related video:

The following two tabs change content below.

Debbie Young

Debbie, editor-in-chief of Richardcyoung.com, has been associate editor of Dick Young’s investment strategy reports for over three decades. When not in Key West, Debbie spends her free time researching and writing in and about Paris and Burgundy, France, cooking on her AGA Cooker, driving her Porsche Boxter S through Vermont and Maine, and practicing yoga.