In my "Politicians' Promises Gone Wrong" special I criticize the minimum wage. That upset some people. One viewer wrote:
John are you serious about the Minimum wage? ... think about all those working poor. If there is no Min Wage then what should be the Limits? ... So sad to see you selling out since your former 20/20 days.
That the minimum wage helps the working poor is a popular policy. Congress recently increased the national minimum from $5.15 an hour to $7.25. A CNN poll found that 86% of Americans supported the change.
Fourteen states increased the minimum still further. Washington State has the highest minimum: On New Years Day, it will increase from $8.55 to $8.67 an hour.
The late senator Kennedy called raising the minimum "a fairness issue... If you work … you should not live in poverty."
But as with so many politicians' promises, this one has awful unintended consequences. It hurts workers -- and the least-skilled workers lose the most. In tonight's show, Merv Christ, the owner of a combination meat counter and bar in Bakersfield, California, says:
Minimum wage jobs are an entry level job to get someone some experience to do something. You raise [the minimum wage] high enough, you cut those people out of the market. Completely.
Because it made sense for Merv to hire teens at $5 an hour -- but not $7 -- Merv now just does without their labor. Other businessmen replaced workers with machines. One, Warren Meyer, told us that the minimum wage has forced him to try out automated ticket machines at campgrounds his company operates.
A study by economists this summer compared the change in employment in U.S. states where the minimum wage rose since 2007 (37 of them) to those where it stayed the same (13.) In the states where the minimum wage rose, unemployment rose more: 114,000 teen jobs lost.
But what about Clint's complaint?
"Think about all those working poor. If there is no Min Wage then what should be the Limits?"
The answer: limits will be set by the market. Right now, some 95% of American workers make more than the minimum. Employers pay more because workers have choices. The free market allows supply and demand to lead the best workers to the best employers.
But the politicians are so arrogant that they think they can make people wealthier just by mandating it.
When the minimum wage was first passed in 1937, Senator Borah of Idaho even said:
“Every man or woman who is worthy of hire is entitled to sufficient compensation to maintain a decent standard of living … If [a business] cannot [pay that], let it close up.”
Let it close up? How does that help workers?
Hear more about this, and the other nine politicians' promises, tonight.