The Quad

Raising the minimum wage hurts (young) workers

Michael Plummer, Op-ed Editor

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Unpaid internships are the minimum wage jobs of rich kids.

Follow me on this. Internships are supposed to be valuable because even though you’re mostly doing menial tasks (getting coffee, answering the phones, etc.) you also learn valuable lessons and skills necessary to succeed in your career.

In the job market, where employers must compete for the most skilled labor, these are known as a worker’s “soft skills.”

And while it sure is nice to be able to afford to work an internship for free, many families cannot afford to do so. Where could a young person from such a background learn those skills?

Traditionally, they have learned those skills in entry-level, minimum-wage jobs. You know these jobs: lifeguards, line cooks and retail clerks are among the most common.

These entry-level jobs are how unskilled young people obtain those “soft skills.” They learn to be reliable workers who can collaborate effectively with their coworkers and take direction. Most importantly, they increase their productivity through experience.

These skills increase a worker’s value on the open marketplace, which enables them to take higher paying jobs in the future.

And the data reflects this. As a matter of fact, only one in three minimum wage workers still makes minimum wage a year later. The other two-thirds of workers go on to earn more than that, according to the National Bureau of Economic Research.

As these figures indicate, there is great mobility among minimum wage workers. This is evidence that minimum wage jobs are not intended to become careers; their intended purpose is to serve as a stepping stone to better jobs and higher pay.

The ultimate effect of legislation that aims to raise the minimum wage is to reduce the number of these jobs available to young people entering the workforce. As a simple matter of supply and demand, higher minimum wages force employers to then discriminate against the young and unskilled.

This occurs because older, more skilled workers are simply more productive than those just entering the workforce.

Again, the data tells the story. The minimum wage was increased seven times between 1990-2009, nearly doubling to reach the present rate.

In the same period of time, teenage unemployment soared from 5.3 percent in 1990 to 9.3 percent in 2009. This was due to government policies that priced millions of kids out of the marketplace.

Young workers rely on entry-level jobs in order to advance to higher paying jobs. When the minimum wage is arbitrarily raised, there are fewer entry-level jobs available. It is the young people who truly pay the cost imposed by minimum-wage laws.

Imagine you ran a cupcake shop, and you had two applicants for an open position that pays $10 per hour.

The first candidate is in her mid-twenties and has experience making cupcakes that makes her highly productive; let’s say she can make three dozen cupcakes nd decorate two dozen every hour. Her productivity yields you, the employer, a surplus value on the $10 per hour you’d be paying her.

The second candidate, a high school student, is inexperienced and less productive. He can only make and decorate a dozen cupcakes every hour. Because of his low productivity, you cannot afford to pay him $10 per hour and still turn a profit. But you could afford to pay him $5.

And, as he gained experience, you could pay him higher wages commensurate with his increased productivity. If you didn’t, his skills would enable him to go work for your competitor across town for that $10 per hour.

But what minimum-wage laws do is stop that process from ever getting started. They say you must pay all workers at least this much, irrespective of market forces like productivity. This precludes employers from offering young workers the chance to rise.

If we truly want to help the poor to rise, we should encourage as much job creation as possible, instead of setting limitations on who can work for whom and for what price. Part of doing so involves leaving market forces alone to set prices—it’s what they do best.

After all, if one person is perfectly willing to work at a wage another person is perfectly willing to pay, who is the government to step in and tell them “no”?

Michael Plummer is a third-year student majoring in communication studies. ✉ [email protected].

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The Student News Service of West Chester University
Raising the minimum wage hurts (young) workers