Minimum wage downside

February 9, 2010
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Ball State University economist Mike Hicks believes the higher minimum wage has cost the state 20,000 to 25,000 jobs, and should be tweaked to give entry-level workers a better shot at jobs.

During a typical recession, the number of minimum wage jobs rises as companies shift more work to part-timers. Not this time, though, at least for teenagers. When the latest increase in the minimum hit in July last year, rising to $7.25 an hour, teenage employment actually plunged.

At a practical level the minimum wage is usually meaningless. Even the worst jobs pay well over the minimum. However, that doesn't necessarily hold true in recessions, particularly in extreme rural areas or in inner cities, Hicks says. There, an abundance of teenagers and a scarcity of jobs has eroded market demand below $7.25. So, businesses cut back hiring.

Hicks thinks the minimum wage should be tiered in order to give teens a better shot at learning work skills.

What are your thoughts about the minimum wage? Do you agree with Hicks that it has shut teens out of the job market during the recession? Is there merit in a tiered system? 



  • no kidding
    What a revelation....not. Raising minimum wage was just one more way of enacting "wealth re-distribution". Paying people with little to no complex skillsets higher amounts of money effectively reduced the value of those of us who worked hard to get ahead wages. So if you started at the lower $5 per hour minimum wage and it took you 5 years to get up to $7 ...suddenly all those who are fresh are making what it took you years to earn? or do we force the companies to then raise every employee by the same percentage? No company can sustain that. It all goes back to entitlement and opportunity. No one "DESERVES" anything but to be treated equally under the law and have the same opportunities to work hard in life to achieve what you want to achieve. Now we are sabotaging an entire generation of teens ability to gain work experience because it is not practical for employers to maintain these wage levels. As if this generation is not already plagued with lack of responsibility and understanding of self reliance...we are now crippling the ones who try to learn what it means to earn a living ability to do so. Guess they will just give up and become reliant on the government handouts and add to the pool of lazy socialists we are developing in this country. Sickening.
    If you want to make more...find something you can learn to do that will qualify you for a job that pays a higher salary. It's all on your shoulders....not anyone else's to take care of you and make sure you get that high def tv you think you deserve. What is the next step....making everyone in the country earn the same thing regardless of their gumption or we can all be "equal"?
    • What is the Global Minimum Wage?
      The increase in the minimum wage was good in theory for some groups, but its rate of increase over just a few years was ridiculous. What is the minimum wage for the entire Earth? That's right, there isn't one. So now every company that kept jobs here because $5-$6 per hour for production workers could still keep them profitable saw that their business would fail when paying $7.25 per hour instead. I'm sure many of those jobs were lost to other countries, not just the recession.
    • Agreed
      Well said. Thanks.
    • Min Wage
      What business is it or should it be for the government to dictate wages anyway? Ask the people in American Samoa about it. They will be losing their jobs and island security because of government stupidity when the tuna industry pulls out because it is no longer economically feasible. So, what will we end up with, more gov'mint handouts because of our own decisions.

      The US Government has turned into a pile of rubbish led by a worthless congress.
    • what about....
      what about retail workers? those positions cannot be exported to other countries, yet they are forced to be employed under the same prices as everyone else. I am not going to say it is good or bad to raise min. wage, but atleast keep the earnings ride along with the rate of inflation is important (whatever % it raises per year).

      Not just that but what about the tip based employees? they make less than minimum wage unless they provide customer service. even at that, some days the customer flow is so low that it will be hard to justify even coming into work. I am all for customer service, but when some management provides conditions which weigh the employees down and the customers do not tip at all, it makes it hard for a Tip-based employee to get excited about their job and show that they care (even if they don't).

      For those who don't like the system for what it is now, there are three options. 1) Get into Politics and change things. 2). Get into the market (as an employee) and change things. or 3) stop complaining like a winy little teenage brat. ---basically go out there and make a change or stop complaining.
      • seriously
        Random I am not sure who your comments were aimed at for sure? But regarding your retail workers, the bottom line is that if you don't feel you make enough to live...perhaps you should plan your life differently. Leave the minimum wage jobs to teenagers, college students, and people who don't require more than that to live. It is called choice. If retailers didn't have people lined up to work those jobs at the minimum wage as it was...then they would voluntarily offer more to get people to come in. Supply and demand. Tried but true concept.
      • that may be true...
        that may be true, but for the college students who are trying to make money to go to college should not kill themselves, putting themselves in high debt. What I am trying to say is, those who are bettering themselves while working in retail shall be paid a little more to assist in getting ahead. in other words, work hard and try to advance your career (in the field of retail or in college), you should be paid a little better than those who don't try to advance their career/life. Pay one's worth as they prove themselves.

        The retailer that I use to work for did such payment plan. One such employee looking to advance themselves in improving the world around them (working harder in the job and/or working hard in college/tech school) had a slight pay increase over the employees who just wanted to get by. Right or Wrong, it was a reward system of - help your business and your business will help you-. I have since moved on, graduated college, had 2 promotions there and moved into my career choice in a different company, but left them on good terms for if I have to go back (in worst conditions of losing everything and needing to go back for any type of work).
      • follow up
        Random,, that is a great thing that your previous individual employer "CHOSE" to do. And I am sure they chose to do that because it rewarded positive productive behavior and attracted the very best staff....a smart investment on their part. That is what I am talking about...businesses will create systems that work for them and pay those more who EARN it naturally... or they won't keep good people and their overall business will likely suffer because of it. The point is that this is a freedom individual employers need to have to help them succeed or fail in a free market economy. It's not the place of the government to decide these things on our behalf.
        Really.... this is the crux of just about everything that is discussed on this blog. People need to take responsibility for their own actions, jobs and businesses ... and have the freedom to fail or succeed without the government stepping in and messing the whole system up for us all. When we all wake up and stop pushing for overall mediocrity and put a pretty bow on it by calling it â??equalityâ??.
      • Skills?
        This isn't about getting people skills. It is about companies paying hard working skilled people less than $7.25/h.

        Who wants to work for slave wages?
      • what skills
        If you don't want to work for minimum wage....then do something about it. If people are so "skilled" then they could get a better job.

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