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Location: California, United States

I am a neolibertarian minded individual who feels that freedom and individual rights take precedence over the wants of government. I believe government exists to serve the people and not to protect us from ourselves. I am an advocate for private firearms ownership, smaller government, reduced taxes and freedom to live your life however you choose, providing you do not directly hurt others.

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Sunday, February 11, 2007

AZ Minimum Wage Hike Causes Layoffs

The Federal government is likely to pass a law to increase the national minimum wage. This is a bad thing, as it will do the following:
  • Harm the lower and middle class by increasing the cost of goods (paying an entry level worker/clerk more means you need to charge more for goods and services)

  • Increase unemployment (if employers can't afford to pay more per hour, they will simply pay for less hours of labor, meaning that they can afford to employ less people)

  • Increase crime (if people working near the minimum wage can no longer find work, they may find other ways to obtain money.)
The story in the title link supports some of my predictions. Here are some quotes about what happened after Arizona increased their hourly minimum wage from $5.15 to $6.75:
Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they're cutting hours, instituting hiring freezes and laying off employees.
The Employment Policies Institute in Washington, which opposed the recent increases, cited 2003 data by Federal Reserve economists showing a 10 percent increase caused a 2 percent to 3 percent decrease in employment. . . . "After a wage hike, employers seek to take fewer chances on individuals with little education or experience," one institute researcher told lawmakers in 2004.
Tom Kelly, owner of Mary Coyle Ol' Fashion Ice Cream Parlor in Phoenix, . . . said, "The new law has impacted us quite a bit." It added about $2,000 per month in expenses. The store, which employs mostly teen workers, has cut back on hours and has not replaced a couple of workers who quit. Kelly raised the wages of workers who already made above minimum wage to ensure pay scales stayed even. As a result, "we have to be a lot more efficient" and must increase menu prices, he said.
The emphasis of the story is on how teenagers are most affected by layoffs caused by increases in the minimum wage. Increasing teenage unemployment is especially harmful to society. Gainfully employed teens learn about responsibility and self-reliance and channel their youthful energy into something positive. Society should encourage this. When I was a teen I knew some kids who planned their free time around how much money they had. If they had enough money for legitimate entertainment, such as a movie, they would behave themselves. If they were out of cash and bored, they would go vandalize something and act like delinquents. Increasing teenage frustration and boredom and making it harder for them to earn money will undoubtedly result in more petty crime.



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