Raising Idaho’s Minimum Wage Harms Idaho’s Teenagers & Small Businesses

1. Having a minimum wage in the first place is wrong. Forcing someone to pay more for a service than he would otherwise is strong-arming. It’s an abuse of property rights. Employees and employers enter into a contractual agreement. If the employee is unsatisfied, he is free to leave. The concept of a “living wage” supersedes the employer-employee agreement. Wages are the natural competitive market rate. If it seems out of balance, competitive wages will influence this over time. Minimum wage violates the principle of freedom by limiting the range of choices open to workers, preventing them from accepting jobs at less than the legal minimum. Are higher wages encouraged? Absolutely. Should they been legislatively forced upon businesses? No.

2. Minimum wage applies primarily to teenagers. No “living wage” required. They live at home. They aren’t the family breadwinners. The market price has dictated the value of their limited skills and experience. Idaho: 13.3% of labor force is 24 years old or younger. Nationwide: HALF of minimum-wage earners are 24 years old or younger.

3. Minimum wage is hardly an Idaho problem 412,000 workers in Idaho. Only 21,000 work at or below the minimum wage. (2014) Aka, 5.1% of Idaho’s labor force works at or below the minimum wage. Of that 5.1%, half are under 25 years old. Of that 5.1%, 2 out of 3 get a pay raise within one year. Of that 5.1%, half work in “Leisure and Hospitality” (restaurants), where tips supplement the hourly wage.

3. A minimum wage raises unemployment for young/unskilled workers. At higher wage requirements, businesses with budget ceilings hire fewer employees.

3. A minimum wage raises unemployment for young/unskilled workers. New York: Minimum wage hike from $5.15 to $6.75 per hour in 2004– 06 led to a “20.2 to 21.8 percent reduction in the employment of younger less-educated individuals,” with the greatest impact on 16- to-24 year olds. Texas A&M economists: “The most prominent employment effect of minimum wage laws is a decline in the hiring of new employees…on average, about one-sixth fewer jobs are created on net for each 10% increase to the minimum wage”. There is abundant evidence that a 10 percent increase in the minimum wage leads to a 1 to 3 percent decrease in employment of low-skilled workers (using teens as a proxy) in the short run, and to a larger decrease in the long run, along with rising unemployment.

3. A minimum wage raises unemployment for young/unskilled workers. Employers shift to labor-saving methods of production: McDonalds kiosks to replace cashiers: Franchisee owner: “At least half of the operators in my region are on the verge of collapse…with minimum wage for fast food workers potentially increasing to incredibly high levels, we are facing a crisis situation.” Another Franchisee owner: "We are in uncharted waters. The minimum wage issue is a major threat to the survival of the operator community.” McDonald's should be "putting every resource available" into finding labor savings, through technologies such as kiosks and automatic fry dispensers.

Workers are prevented from accepting jobs at less than the legal minimum wage… …Even if both parties would be better off. Employers will not pay a worker $9 per hour if that worker cannot produce at least that amount. Major majority of studies conclude that employment will suffer: In a comprehensive 2007 review, Neumark and Wascher summarized more than 100 studies published since the 1990s, from both the United States and abroad, and conclude that: “the preponderance of the evidence points to disemployment effects.... Of [102 studies], nearly two-thirds give a relatively consistent... indication of negative employment effects of minimum wages, while only eight give a relatively consistent indication of positive employment effects.” 85% of these studies “find negative employment effects on low-skilled workers.” 3. A minimum wage raises unemployment for young/unskilled workers.

4. Employers Harmed Nationwide: 44% of minimum-wage workers are employed by small businesses, not corporations. These are businesses less likely to have flexibility with employee wages. If companies accommodate by raising prices, consumers buy less, leading to fewer sustained jobs on the whole. If minimum wage hikes cut into business profit at all, there is less available for capital investment. This also leads to slow future job growth.

Not convinced? “If the state won’t help, who will?” The free market: Two of every three minimum-wage workers get a raise within a year. “I don’t believe employment actually suffers.” Richard Freeman, the godfather of labor economics: “one reason minimum wage increases don’t have the job loss effects their opponents predict is because the political process disallows increases that would be large enough to trigger such effects.” Employers may reduce hours, not employment. Economies are huge and complex. National or state unemployment rates as a whole may not be affected, because the majority work above the minimum wage. But again, zoom in: What about the young, unskilled, and inexperienced just entering the workforce?

Conclusion: Idaho’s Teens Would Suffer