AEI: Why minimum wage hike is bad economic policy

[Regis Philbin]

http://www.aei.org/publications/filt...pub_detail.asp

Why a Higher Minimum Wage Is Bad Economic Policy

By Kevin A. Hassett
Posted: Monday, July 10, 2006
Publication Date: July 10, 2006

If you want to know why the Democrats keep treading water in spite of an unpopular president and the feckless pork-barrel leadership of congressional Republicans, look no further than the minimum wage.

In a recent move that was about as surprising as a low-scoring soccer game, Democrats made it clear they will make the minimum wage a central part of their election strategy next fall.

They certainly took to the pulpits in recent weeks. Howard Dean, chairman of the Democratic National Committee, opined to a church group that "it is a moral principle to raise the minimum wage. It is nothing but economist mumbo jumbo to say raising it will hurt jobs." Massachusetts Senator Edward Kennedy issued a report under the title: "When Work Doesn't Pay: Minimum Wage Families in America."

The minimum wage began in 1938 with the Fair Labor Standards Act, which enacted a 25-cent hourly wage. Over time, the rate has increased, and the act has been repeatedly amended, resulting in today's $5.15 per-hour wage. The rate hasn't been increased since 1997.

A higher minimum wage is terrible economic policy and Americans know it. State-level Democrats have been pushing the issue this year and have been on the losing side of the debate. While eight states have enacted legislation to increase the minimum wage this year, 18 have seen such legislation defeated, according to the National Restaurant Association. Several states have minimum wage legislation pending, including California, Massachusetts, North Carolina and Pennsylvania, but so far the record on the minimum wage stands at a resounding 18-8 against.