Increasing unemployment with minimum effort.

ITEM: "In an election year," said the Christian Science Monitor for June 22, "it's a dream issue for the Democrats: The Republican-controlled Congress has not raised the federal minimum wage in nine years, despite strong public support for an increase." To Democrats, reports the paper, "it boils down to a question of morality and fairness. 'This is an issue about the dignity of workers in this country that do hard and difficult work--that are teachers' aides, work in our nursing homes, clean out the great buildings of American commerce,' said Sen. Edward Kennedy (D) of Massachusetts, ranking Democrat on the Health, Education, Labor and Pensions Committee."

CORRECTION: Those who look to the hero of Chappaquiddick for moral leadership and believe that he weeps crocodile tears for poverty-stricken minimum-wage workers might actually buy the bogus argument about how the federal government should order, by fiat, a major increase in hourly wages nationwide.

However, most economists understand that an increase in the minimum wage will cause higher prices and lower employment rates. As economist Walter Williams has explained:

   Those who hold this view [that a
   business must employ a certain number
   of workers] think that the only effect
   from the mandated higher wages
   is an increase in the worker's take-home
   pay at the expense of the businessman's
   profits. On the other hand,
   if you understand that an employer
   doesn't simply need a fixed number
   of workers to perform a given task,
   you might still be sincerely concerned
   for the welfare of low-skilled workers
   but be against increases in the
   minimum-wage law. Such a person
   would realize that when the price of
   a resource rises, employers will seek
   substitutes. He might substitute capital
   for labor, he might automate. He
   might reorganize his productive technique
   so as to economize on labor
   costs. He might move his operation
   to a nation where wages are lower.
   The workers who lose their jobs will
   be worse off. Of course, those workers
   who keep their jobs will be better
   off, but at the expense of their now
   unemployed co-worker.

Many liberals do recognize this, but have other priorities. After all, these are the same folks who urge higher taxes on, say, gasoline and cigarettes because that will make them more expensive and cause consumers to use less of these products. The same principles apply to employers and employees, especially low-skilled workers.

Businesses seek to maximize profits; they are not apt to hire unless an employee's productivity creates more revenue than his wages and other compensation. As it is, many teenagers who need experience so they can later earn higher wages are being priced out of the job market. Economist D.W. MacKenzie of SUNY Plattsburgh also notes that minimum-wage laws "do affect ethnic minorities more so than others." He cites figures from the Bureau of Labor Statistics for 2005 showing that unemployment rates for those aged 16-17 was 17.3 percent for whites; 25 percent for Hispanics; and 40.9 percent for blacks.

Well-known economist Milton Friedman has long pointed at minimum-wage laws as the main cause for the high rate of unemployment among young people, especially black teenagers. The government, said Friedman, does harm with minimum-wage mandates, making it difficult to get on-the-job training. "Without the minimum-wage law," as he said, "the least skilled could offer to work for low wages, which would provide an incentive for employers to hire and train them."

Senator Kennedy's campaign to bump the minimum wage by $2.10 an hour has been unsuccessful thus far in Congress (though many states are acting on their own); yet, these efforts would largely bypass the supposed targets. The average family income of those who would benefit from the measure is $45,580, according to the Employment Policies Institute. The EPI also has determined that only 3.7 percent of the potential benefits would go to poor African-American families. Indeed, about four-fifths of all minimum-wage workers are not "poor" by the government's definition.

Yet, there may well be more poor if there is a mandated increase. When the minimum was boosted the last time, 146,000 restaurant workers lost their jobs, according to the National Restaurant Association. The association says that if the federal minimum were to be raised to $6.65 per hour, a quarter of its members would have to cut jobs, resulting in a loss of 217,000 positions.

So why are unions pushing measures that are inimical to workers? Well, labor unions aren't charities either. They have their own political and economic motives. For example, as explained by Troy Senik of the Tennessee Center for Policy Research, "unions commonly index their own wages to minimum-wage rates. The pay of a union worker is often a multiplier of the minimum wage--with hourly wages set at four, six, even 10 times the minimum wage. This means that a $1an-hour increase in the minimum wage would cost businesses hundreds more a week for each union employee, leading to an increase in the price of everything from cars and houses to monthly utility bills."

The fact that virtually no union worker earns the minimum wage has not cut into big labor's backing for increases. As observed by Dr. Benjamin Powell, director of the Center on Entrepreneurial Innovation at the Independent Institute, there is a basic reason for this support: such laws "enhance the demand for union workers by unemploying their low-cost, low-skilled competitors."

The duplicitous advocates of having the government mandate higher wages, a move guaranteed to toss many young and less-skilled workers out of their jobs and restrict potential employment, are following the path of least assistance.