NTU urges all Senators to vote “NO” on S. 1737, the “Minimum Wage Fairness Act” and any other proposal that would raise the federal minimum wage. Legislation to do so would increase unemployment and exacerbate economic challenges.
Economist Milton Friedman wrote that “The real tragedy of minimum wage laws is that they are supported by well meaning groups who want to reduce poverty. But the people who are hurt most by higher minimums are the most poverty stricken.” This statement has been reflected in numerous studies that have consistently indicated a negative employment effect of increasing the minimum wage. It was recently confirmed once again by the Congressional Budget Office (CBO), which projected that S. 1737 could cause a loss of up to 1 million jobs by 2016. CBO’s research directly contradicts Senate Majority Leader Harry Reid’s erroneous claim that raising the minimum wage would create “85,000 new jobs.”
Because increasing the minimum wage creates a serious misalignment between wages and productivity, many employers would be forced to lay off workers (often those at the low end of the pay scale this bill is intended to help), forego new hiring, and cut back on other employee benefits to remain profitable. For workers facing an uphill battle against long-term unemployment and a stagnant job market, raising the minimum wage would add insult to injury by increasing both the pool of unemployed job-seekers and the duration of unemployment. Sadly, these repercussions disproportionately affect low-skilled and disadvantaged workers who need the experience entry-level jobs provide. When the most reliable route to higher earnings is accumulating experience and skills in the labor market, Congress shouldn’t be creating more roadblocks for workers to get ahead.
The other side of the minimum wage coin is the fact that many minimum wage earners are promoted to higher compensation levels within a year of taking a job. A 2012 Cato Institute study explains that 49.0 percent of minimum wage earners are teenagers or young workers under 24 and 62.2 percent live with families of incomes of two or more times the official poverty level. Only 4.7 percent minimum wage earners are adults 25 or older working full time with families to support. Senators should oppose legislation that risks undermining the jobs we do have. Rather than raising the minimum wage and perpetually extending federal unemployment insurance, Congress should focus on policies that boost job growth and get individuals back to work.
Given these hard-earned economic lessons, NTU opposes this and any other efforts to increase the minimum wage.
Roll call votes on S. 1737 will be significantly weighted in our annual Rating of Congress and a “NO” vote will be considered the pro-taxpayer position.
If you have any questions, please contact NTU Federal Affairs Manager Nan Swift at (703) 683-5700