Last year, Utah Sen. Orrin Hatch got nowhere with his plan to cushion the adverse impact of a higher minimum wage even though his ideas made good sense.
Now the same sort of proposal is back - but with much more political clout behind it.President Bush, no less, is supporting efforts to hike the minimum wage, currently at $3.35 an hour, to $4.65 over three years. But his support hinges on the inclusion of a lower wage for all new hires during their first six months on the job. That's an extention of Hatch's suggestion for adding a three-month training-wage provision to the minimum wage.
As a result of Bush's stance, Congressional Quarterly reported this week, the White House is starting to win some battles on Capitol Hill over raising the minimum wage. The Associated Press also reports that Democrats in both the Senate and House of Representatives have indicated a willingness to compromise.
Unfortunately, this word does not seem to have gotten through to the House Education and Labor Committee, which recently rejected the Bush proposal. Even if Bush wins this particular part of the fight, the White House doesn't seem likely to win as many battles as it ought to. Even with a lower wage for new hires, a hike in the minimum wage is still bound to hurt the very people it is supposed to help - namely, the poor.
Why? Because, when the government forces employers to pay more for employees than they are worth under current market conditions, the requirement induces employers to hire fewer new workers or even cut their payrolls.
No wonder several studies over the years have indicated that hiking the minimum wage to $4.65 would destroy up to 882,000 jobs. That figure includes nearly 13,000 jobs that would be lost in Utah over a period of eight years.
An estimated 170,000 jobs across the nation would be saved by the proposal to let employers keep paying new hires only $3.35 during their first six months on the job.
It doesn't take an exercise in higher mathematics to see that, even if Congress goes along with President Bush's plan, the higher minimum wage still would do too much damage. That's because it puts short-sighted politics ahead of sound economics. Can't more be done to cushion the adverse impact of what Congress seems
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