The United States Should Establish a Living Wage for Its Workers
CON (3 arguments)
1) “By establishing a living wage, we only hurt our economy. Trust me, losing jobs and money is not a good thing.” stated Gertrude Nasar, a professor of business at Columbia University.
2) Gov. Schwarzenegger proposed 15 percent increase in the state minimum wage would destroy about 35,000 to 70,000 unskilled jobs - putting 1.5 to 3 percent of young people out of work.Overall, the increase in California would eliminate about 70,000 to 140,000 jobs. A 15 percent increase in the minimum wage nationwide would destroy about 290,000 to 590,000 young people's jobs, and about 400,000 to 800,000 jobs overall. Therefore, having a minimum wage increase, which is the same as establishing a living wage, decreases employment and in general puts young Californians out of work.
Establishing a living wage is the equivalent of increasing the minimum wage. Therefore, it is reasonable for us to bring up statistics and evidence proving why an increase in the minimum wage is negative.
The living wage poses a big threat to cities’ economic health, because the costs and restrictions it imposes on the private sector will destroy jobs—especially low-wage jobs—and send businesses fleeing to other locales. Worse still, the living-wage movement’s agenda doesn’t end with forcing private employers to increase wages. It includes opposing privatization schemes, strong-arming companies into unionizing, and other economic policies equally harmful to urban health.
In the 1990s in Baltimore, living wage was established, and as a result, Baltimore saw its economy crash and burn with 58,000 jobs disappearing, even as the rest of Maryland added 120,000 jobs and other cities across the country prospered. The living-wage bill was just one expression of a fiercely anti-business climate that helped precipitate Baltimore’s economic collapse.
Earlier this year, economist David Neumark of the University of California, Irvine, wrote on these pages that the 70-cent-an-hour increase in the minimum wage would cost some 300,000 jobs. Sure enough, the mandated increase to $7.25 took effect in July, and right on cue the August and September jobless numbers confirm the rapid disappearance of jobs for teenagers.
The September teen unemployment rate hit 25.9%, the highest rate since World War II and up from 23.8% in July. Some 330,000 teen jobs have vanished in two months. Hardest hit of all: black male teens, whose unemployment rate shot up to a catastrophic 50.4%. It was merely a terrible 39.2% in July. The biggest explanation is of course the bad economy. But it's precisely when the economy is down and businesses are slashing costs that raising the minimum wage is so destructive to job creation. Congress began raising the minimum wage from $5.15 an hour in July 2007, and there are now 691,000 fewer teens working.
In a study by Dr. Yelowitz “Santa Fe’s Wage Ordinance and the Labor Market,” dated September 23, 2005 (published by the Employment Policies Institute) Yelowitz demonstrates that the Santa Fe living wage is responsible for significant, negative consequences for Santa Fe’s least educated residents, including a 9.0 percentage point increase in the city’s unemployment rate among such workers.
A study done by the Economic Development Corporation predicted that at least 33,000 prospective jobs would be destroyed by establishing a living wage over the next 20 years. In addition, the study found that $7 billion in private investment would be lost.
A 1999 Tolley report said that over 1,300 jobs will be lost in Chicago from the city's establishment of a living wage. The Employment Policies Institute (1999) estimates that if all of California adopted a living wage, there would be over 600,000 lost jobs and $8.3 billion in lost income.
A comprehensive survey of minimum wage studies found that a 10 percent increase in the minimum wage would reduce employment of young workers by 1 percent to 2 percent.
Employment Policies Institute, National Center for Policy Analysis
David Neumark, professor of economics at Michigan State University, and William Wascher, a researcher with the Federal Reserve, found that minimum wage hikes decrease the proportion of teenagers enrolled in school. In states which allow students to drop out of school before they are 18, a 10 percent increase in the minimum wage caused teenage school enrollment to drop by two percent. In states which require students to stay in school until they are 18, raising the minimum wage had no effect. In sum, when students have the option, higher minimum wages motivate some to leave school and start working.
Another recent paper confirms this conclusion. Duncan Chaplin of the Urban Institute, Mark Turner of John Hopkins University, and Andreas Pape of Michigan State University examined teenagers' continuation ratios-the proportion of a school's students in any year who either graduate or progress to the next grade level. They found that higher minimum wages decreased continuation ratios and led teenagers to drop out of school. Again, this result was present only in states where teenagers could drop out of school at younger ages.
Michigan State University, Federal Reserve, Urban Institute, John Hopkins University
From an economic, utilitarian perspective, unemployment creates a motive to participate in crime because crime is an alternative way of satisfying one’s economic needs. Second, unemployed individuals, must endure the psychological strain of not being able to achieve their financial aspirations. For reasons that need not be economically “rational,” such strains can also lead to criminal delinquency.
Masanori Hashimoto analyzes national-level time-series teen arrest data derived from the FBI’s Uniform Crime Reports from 1947 to 1982. He found that changes in the minimum wage over the period are positively associated with teen arrests for property crime as a fraction of total arrests. In 2002, Chressanthis and Grimes also used national-level Uniform Crime Reports data. Their research included unique controls such as school enrollment rates and capital punishment rulings by the Supreme Court. They conclude that the minimum wage positively affects the incidence of murder, rape, and motor vehicle theft among teenagers. This is sourced from the report, “Youth Crime and the Minimum Wage,” by Andrew J. Kallem.
“Youth Crime and the Minimum Wage” by Andrew J. Kallem