More Job Killing Regulations Approved by President Obama

Heritage Foundation

According to the United States Department of Labor, the nation’s unemployment rate has already risen to 9.5%. The Obama administration is predicting that the nation’s unemployment rate will soon rise above 10% and the Federal Reserve predicts unemployment could stay above that 10% mark for sometime. One would think, therefore, that the Obama administration would do everything in their power to stop federal government policies from causing even more job losses. You’d be wrong. Today the Obama administration is not just allowing, but celebrating, a job and opportunity killing raise in the federal minimum wage.


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Secretary of Labor Hilda Solis told the USA Today that the federally mandated raise to $7.25 per hour will create “extra disposable income [that] comes to about $120 a month.” Solis expects “workers to spend much of that cash in their local communities.” What nonsense. Where does Solis think this “extra” $120 a month comes from? Does she think it falls from the skies or grows on trees? Here in the real world, when governments forces firms to pay some workers more money, it has to come from somewhere. And that somewhere usually is lost jobs and lost opportunity for low-skilled workers.

The Minimum Wage Kills Jobs: Two-thirds of recent minimum wage studies find that it reduces employment, with the overwhelming majority of the most rigorous studies reaching this conclusion. Although individual studies give different estimates, the typical results from research suggest that a 10 percent increase in the minimum wage will reduce employment among heavily affected groups of workers by roughly 2 percent. These estimates show that–under normal economic circumstances–this scheduled increase will cost low-skilled workers 300,000 jobs. But these are not normal economic times. The unemployment rate for adults without a high school diploma has risen 7.8 percentage points to 15.3 percent. However, the unemployment rate for workers with a bachelor’s degree or higher–almost none of whom earn the minimum wage–has only risen by 2.5 percentage points. Less-skilled workers have borne the brunt of job losses in the recession. This minimum wage hike will hit the most vulnerable the hardest.

The Minimum Wage Kills Opportunities: Low paying jobs provide unskilled workers with the invaluable work experience they need to move up the career ladder. Fully 40 percent of minimum-wage workers did not have a job in the previous year and two-thirds of minimum wage workers earn a raise within a year. The minimum wage increase will saw off the bottom rung of the career ladder for many unskilled workers.

Later in the same USA Today article mentioned above, business owner Bob McGrath sets the Obama administration straight about the real affect of their minimum wage hike: “In this economy, you can’t raise prices. Margins are getting hammered. Here we’re having (employees) take pay cuts, but we’re hiking minimum wage. Something is wrong.” Something is wrong, indeed.

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