Please Don’t Raise the Minimum Wage
Tuesday, April 24th, 2007Raising the minimum wage is not a good idea. The point of increasing the minimum wage is to make poor workers better off. However, it will not do a good job for two reasons.
First, it is poorly targeted. A minimum wage increase does not increase the pay of only poor workers. It also increases the pay of many teenagers who are supported by well-off parents, and some whose spouses make tons of money.
Secondly, a minimum wage increase will result in a rebound effect of firms laying off workers. There is only so much money that can be spent on payroll, and if firms must pay all of their workers more per hour, they will have to cut back on the total number of workers employed. In addition, many small businesses may go under because they were dependent upon paying their workers the current minimum wage.
Why not just increase the Earned Income Tax Credit rates for the poor? EITC changes will target only the poor, and will not result in businesses laying off worker to keep pace with the increased required pay rate. Congress - if you want to help the poor, change the EITC, not the minimum wage!

