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Policy: Labor

Manhattan Moment: Democrats don't practice what they preach on minimum wage

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Opinion,Op-Eds,Jobs,Labor,Economy,Manhattan Moment,Minimum Wage,Tom Harkin

Once again, congressional leaders are telling Americans to do as they say, not as they do.

The Fair Minimum Wage Act would raise the minimum wage to $10.10 an hour over two years and then index the rate to inflation. The act is sponsored by Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., even though neither pays their congressional interns.

The double standard does not end there. The Employment Policies Institute found that 96 percent of the other 200 Democratic sponsors do not pay any of their interns.

The senators might argue that the non-monetary benefits of an internship justify the lack of pay. Clearly the young people who take the internships agree, or else they would not have applied.

The greatest benefit of internships is the experience the interns gain, which leads to stronger resumes and better future job prospects. No one forces students into unpaid internships. Quite the opposite — unpaid internships on Capitol Hill are highly competitive.

The bill’s sponsors could also argue that if they were forced to pay their interns, they would not be able to hire as many young people.

The same economic reasoning applies to minimum-wage jobs. Young people, who comprise half of minimum-wage workers, are looking to gain the hard and soft skills that come with holding a real job. They use entry-level positions to prove their work ethic and develop their human capital.

Raising the minimum wage makes it harder for organizations to hire inexperienced workers. Businesses always have the option to not pay people at all, by letting workers go or not hiring new applicants. Employers only need to pay minimum wage to the people they choose to employ. The CBO recognized this in its February report on the negative labor market effects of increasing the minimum wage.

Non-profits are exempt from paying their interns, but for-profit firms have to pay theirs if the internship is not for college credit. This means taking an unpaid internship can cost students thousands of dollars in college tuition in exchange for internship credits.

The labor standards lawmakers force on the private sector should also apply to the government. Imagine the outrage if the minimum wage rose to $10.10 an hour for private-sector workers, but stayed at $7.25 for government employees. As with other laws, Congress wants to exempt itself from costly side effects.

Harkin and Miller earn easy political points by claiming that raising the minimum wage has no costs, yet they would hire fewer interns if they had to pay them. Similarly, employers would hire fewer workers if they had to pay them $10.10 an hour.

Unpaid internships, in Congress and elsewhere, are helpful to interns. Minimum-wage jobs are beneficial for the same reasons. Policies that make entry-level positions more difficult to obtain, such as a higher minimum wage or prohibiting unpaid internships, often hurt the very people they are meant to help

Congress understands basic economics when negative consequences of laws and regulations affect its members. If members of Congress would apply the same reasoning they use in decisions that affect their staffs and their families to the country as a whole, many destructive economic policies would not become law.

Jared Meyer (@JaredMeyer10) is a policy analyst at Economics21, a center of the Manhattan Institute for Policy Research.
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