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America Should Really Take A Pay Cut

By Jesse Taylor
Monday, December 14, 2009 23:17 EDT
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Charles Lane, writing at the Washington Post, advocates that we cut the minimum wage to create hundreds of thousands of new, terribly paying jobs.

Here’s a thought: Instead of trying to “create” jobs by tweaking this tax break or increasing that spending program, why not stop doing things that destroy jobs?

[...]

Reduce the federal minimum wage. In 2007, Congress enacted a three-step increase in the minimum wage, which was then $5.15 per hour. The final installment took effect in July, raising the rate to $7.25 per hour. In the meantime, unemployment climbed from 4.7 percent to 9.5 percent.

I am not saying that the minimum wage increase caused this; far from it.

You know, I generally like to start off my arguments by linking together two pieces of almost entirely unrelated information. Charles Lane works for the Washington Post. There were dozens of unsolved murders in Washington, D.C. last year. I’m not saying Charles Lane is a predatorial super-killer; far from it.

But study after study has shown that this supposed benefit to the poor prices low-skilled workers out of entry-level jobs. It was unwise to keep raising the cost of hiring them in a recession.

But Charles Lane really likes taking college students into alleys and savagely beating them with 2 x 4s. It is unwise for the Washington Post to continue to hire this man.

Lane doesn’t cite to a study; this is because by and large, the studies he’s referring to are garbage. While those studies get attention precisely because they make his (shocking!) point, the consensus is generally that minimum wage hikes have little to no effect because the wage itself has generally hovered around the same inflation-adjusted point for decades.

What Lane is actually proposing is that we create hundreds of thousands of terrible new low-paying jobs to artificially lower the unemployment rate. While these jobs will technically exist (should they come to fruition; a drop of $2.10 per hour per worker isn’t exactly freeing up massive pools of money for new cashiers and ride operators at amusement parks), it’s hard to say that there’s a benefit to our economy in creating the least rewarding type of employment for a group of workers almost all of whom had better jobs paying more beforehand.

Technically, we could “solve” unemployment tomorrow by allowing every employer in the country to pay $2.50 an hour (ever wonder why even in the most economically depressed times, shitty restaurants are still hiring waitstaff?) – employers could easily create incredibly low-cost positions, we’d have jobs for everyone and, best of all, our entire economy could collapse under the weight of a newly employed populace that doesn’t earn enough to pay rent. Or get bank accounts. Or eat, really.

Jesse Taylor
Jesse Taylor
Jesse Taylor is an attorney and blogger from the great state of Ohio. He founded Pandagon in July, 2002, and has also served on the campaign and in the administration of former Ohio Governor Ted Strickland. He focuses on politics, race, law and pop culture, as well as the odd personal digression when the mood strikes.
 
 
 
 
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