Their pathetic attempts to fix the economy and job market by throwing money around like it grows on trees – when in reality, it comes from Bernanke’s printing press – has failed miserably. Now Bernanke is betting on QE3 which will accomplish nothing but drive prices up and our dollar down, unless you happen to be a wealthy investor.
But never fear, Democrats are full of new ideas.
Rep. Maxine Waters, D-CA wants a new $1 trillion stimulus for social programs which she claims will fix everything. Duh, everyone knows the solution to any problem is to throw money at it. Just look at California’s economy and how well throwing money at a problem worked for the public education system.
Rep. George Miller, D-CA introduced the Fair Minimum Wage Act of 2012 which would raise the minimum wage by 35%, from the current $7.25 to $9.80 and then index it to inflation. The bill would also raise the minimum wage for tip earners by over 200% by indexing it to 70% of the new minimum wage.
Rep. Rosa Delauro, D-CT and Senator Tom Harkin, D-IA introduced another version of Miller’s bill, the Rebuild America Act which would raise the minimum age by 35% and then index it to inflation. They also want to raise the minimum wage for tip earners by over 200%.
Rep. Jessie Jackson, Jr., D-Il introduced his own version, the Catching Up to 1968 Act of 2012, to raise the minimum wage by 38% to $10.00 an hour and then index it to inflation. He also would raise the minimum wage for tip earners by over 200% by indexing it to 70% of the new minimum wage.
Gee, now that I look at it in print, it seems Democrats only have one shared idea to fix the economy.
But, increases in the minimum wage will only exacerbate unemployment. When dealing with a stagnant economy, businesses will just cut payroll.
When Congress raised the minimum wage to $7.25, the job market took a big hit. Cornell University’s Industrial & Labor Relations Review cited a study showing that it led to roughly a 20% cut in jobs for the young and low skilled workers.
Michael Saltsman, research fellow at Employment Policies Institute, a free market think tank in D.C. says that “if the minimum wage had been linked to inflation since it was first created in 1938, it would only be about $4.00 now.” Inflation rises and falls so the minimum wage would also rise and fall.
All the minimum wage bills introduced by the Democrats overlook one critical fact - the vast majority of minimum wage workers aren’t stuck at minimum wage. Two-thirds of workers earn a raise in the first 12 months on the job. Another overlooked fact is that over 57% of minimum wage workers live at home with their parents or have a spouse that is also employed. Less than 10% of minimum wage workers are single parents.
Retail establishments, restaurants, hotels and the entertainment business, which are barely surviving in this economy, would face the biggest job losses.
According to the Employment Policies Institute, the number of jobs that could be lost by such a large increase in the minimum wage could run anywhere from 256,200 to 786,600.
Minimum wages are a poor way to reduce poverty, and will reduce employment job opportunities among the least skilled, affecting numerous younger workers.