Raising Unemployment for the Unskilled?
From the NY Times, an article "Raising the Floor on Pay:"
"On the verge of controlling Congress, the Democrats are making a much-delayed increase in the minimum wage their signature attempt to lift incomes and quiet widespread economic anxiety.
The Democrats plan to introduce a bill in Congress next month that would increase the federal minimum for the first time in a decade — to $7.25 an hour in the spring of 2009, reaching that level in three steps from the present $5.15 an hour.
More than 13 million workers earning less than $7.25 an hour today, or just above that, would get raises."
Problem: Demand curves for unskilled workers slope downward, so a 40% hike in the wage for unskilled workers would mean that there were would be FEWER than 13 million jobs after an increase in the minimum wage. Many of those workers would probably be getting pink slips instead of raises.
And if it was possible to legislate raises for the 13 million unskilled workers currently earning $5.15 per hour, why are politicians being so stingy? After all, wouldn't a raise to $17.25 per hour be a lot better for the 13 million workers than just $7.25? Or $27.25 per hour?