The Fair Labor Standards Act of 1938 introduced the federal minimum wage. Its primary purpose was to protect women and children from employer abuses.
In March, Forbes magazine reported the last increase in 2009 to $7.25 resulted in 600,000 teen jobs disappearing within six months, as employers opted to hire experienced workers at the same hourly rate, yet "60 percent of the intended target (the poor) don't work."
The minimum wage rate is scheduled to rise to $10.10 (or higher), a 39 percent increase.
A Harvard study of the rate showed decades of economists' research indicating long-term harm to the economy, stifling employment of unskilled workers, youth and minorities and requiring employers to adjust compensation upward for experienced workers already on the job.
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CBS reported, "FMW initially raises income for the unskilled but also increases the costs of hiring unskilled labor, potentially reducing the number of hires long term." And the Washington Post wrote, "it's a terrible idea, inflationary." A congressional committee heard from a senior policy analyst last March who said "it's ineffective and counterproductive."
So, is the federal minimum wage self-defeating? Will it serve to bridge the wealth gap? Basic economics and the law of supply and demand says that the higher the price, the less will be taken.
Our politicians like the minimum wage for its vote-getting potential. However, they lack understanding of how business, private enterprise and the free market system actually functions.
Hilton Head Island