Congress, desperate to actually accomplish something, managed to get the mininum wage raised to 7.25 an hour, and they only managed that by tying it in with funding for the Iraq war. Too bad an increase will not help anyone, and will probably cost a lot of mininum wage earners their jobs.
Now I suppose that there are some people who truly and honestly think that increasing the mininum wage will help those making it. They might be moved by compassion because of the story they see on the six o'clock news where the news station manages to dig up the three people in town who have to support a family on the mininum wage. For most people, however, supporting a mininum wage increase is either political opportunism, economic illiteracy, or a desire to spread class warfare. Sometimes it's all three.
Labor, like anything else a business has to spend money on, is a cost. When a cost goes up in one area that business must offset it either by raising prices, and thus passing the burden of this wage increase onto the consumer, or by cutting the costs that have gone up. In this case that is labor. By cutting labor people will be laid off, and fewer people will be hired.
The bad economics behind the wage increase does not stop Congress from being proud of it. Ted Kennedy said the achievement was one of "the proudest of this new Congress." What's that say about Congress when they are more proud of a pay raise that will cost people jobs than they are by, say, funding the troops?
The left leaning Economic Policy Institute estimates that 5.6 million people, which is about 4% of the workforce, earn less than 7.25 and hour, the new mininum wage. Now if only 4% of American workers in the mininum wage that would mean that the other 96% earn more than that. But to hear Congress you would think that they just saved the American economy.
"This is a great day for America's middle class," said Rep. George Miller(D-CA) "America's workers have been waiting for this for a long time." Have they? How is it a victory for the middle class when the middle class doesn't earn the mininum wage? Does Congressmen miller believe that mininum wage earners are middle class? Does he believe that only 4% of the workforce is middle class? I suppose everyone else falls into that large and vague Democratic category "the rich".
In order to get Congressional Republicans to go along the Democrats tossed them a bone, which they eagerly accepted. Small businesses will get 4.84 billion in tax cuts to help offset the costs of the wage hike.
History doesn't hold out much hope for mininum wage earners, who are most likely young, living with their parents, or hispanic or african american women, as the las mininum wage hike saw 146,000 lost jobs in the restauraunt industry alone, while they held back hiring 106,000 new workers.
It's the poor who will be hurt by this. Many businesses will lay off workers, and many will put freezes on hiring new workers. If the Democrats cared at all about mininum wage workers, the middle class, or the American economy, they would keep their hands off of it. There's no more dangerous words than "I'm from the government and I'm here to help."


