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Raising minimum wage will hurt more than help

PRESIDENT Barack Obama made some good points when he addressed growing income

inequality in a speech Wednesday to the Center for American Progress in Washington, D.C.

The first step, he said, is to grow the economy:

  • "To begin with, we have to continue to relentlessly push a growth agenda."
  • "That means simplifying our corporate tax code in a way that closes wasteful loopholes and ends incentives to ship jobs overseas."
  • "It means streamlining regulations that are outdated or unnecessary or too costly."
  • "And it means coming together around a responsible budget - one that grows our economy faster right now and shrinks our long-term debts."
  • So far, so good.

  • "And that's why it's well past the time to raise a minimum wage . . ."
  • Shucks. He was doing so well up to that point.

    Not that Americans are against good wages for working people, but the question is how to stimulate increased earnings.

    A study published this month by Texas A&M University economists Jonathan Meer and Jeremy West conclude that raising the minimum wage will reduce job growth. "Following the recent recession, unemployment remains disproportionately high for less educated and inexperienced workers," the A&M economists report.

    Thus, the people who need new access to the job market would be most likely to be affected by not getting a job in the first place. "Raising the minimum denies more low-skilled workers the opportunity to get a job and receive on-the-job training," wrote William Dunkelberg in Forbes.

    A University of Maryland study reported the impact of government policies on low income, one-earner families when a non-working spouse decides to take a job at about the same rate of pay - $11 per hour - as the first wage earner. Because of additional taxes, loss of tax credits, loss of government benefits, and increased costs - that spouse's extra income would only add about $3 per hour to the family income stream.

    Reversing regressive tax policies on working individuals and families as well as reducing burdens on business will do more to increase take home pay, encourage job growth and correct income inequality than a government imposed hike on the cost of doing business.


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