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 ...