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Minimum Wage Increase is Not the Answer
Washington Needs to Promote Growth, Skills
(Washington, D.C.) – The President has called for an increase in the national minimum wage and is pushing for Congress to approve it. He argues that such a move could reduce income inequality. However, such an increase will likely hurt the very group they seek to assist.
Income inequality in the United States has grown significantly under President Obama. While a minimum wage increase sounds attractive, the data show that since 1975, a 10 percent increase in the minimum wage has been followed by increasing unemployment among low-skilled workers. Companies concerned about government mandates that raise the cost of hiring new workers are also experimenting with new ways to use automation to reduce the need for workers. Given these facts, it's clear that a minimum wage increase could hurt those it is intended to help. This is especially true given the continued weak economy, and the pressures on employers to comply with mandates imposed by the Affordable Care Act and other laws.
Daniel Garza, Executive Director of The LIBRE Initiative released the following statement:
"The government simply cannot make working families better off just by passing a law to mandate more pay. There's plenty of evidence that when government dictates to employers what they must pay, low-income workers are hurt most. When the government mandates more pay for labor, employers are forced to cut down on that same labor. Those funds must come from somewhere and unfortunately, it is typically from the pockets of the low-income worker.
Many working families are falling behind in the weak economy that has persisted for years. We've tried an agenda centered on hundreds of billions in deficit spending and tax increases, as well as new government programs and more regulation, and it just hasn't worked. We need to make it easier for entrepreneurs to grow businesses and create jobs. Washington must also look more broadly at how to make sure working families can keep more of their income, and guarantee their kids a better education – so that they have the tools they need to build a better future. This quick, one-time fix should be highlighted for what it is – a politically attractive gimmick, that will only harm people in the end."
For interviews with a LIBRE representative, please contact: Judy Pino, 202-578-6424 or Brian Faughnan, 571-257-3309.