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Opinion: Columnists

The minimum wage is rarely a household's sole sustenance

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Opinion,David Freddoso,Columnists,Minimum Wage,Unemployment,State of the Union

Earlier this month, I wrote about how North Carolina cut off its extended unemployment benefits in July, only to see its job market take off in the months afterward. As the new Labor Department state employment data from last week reaffirm, the cuts don't seem to have hurt the state's economy at all, and might have even helped encourage job-seekers to take what was available.

This reality did not prevent President Obama from calling on Congress in Tuesday's State of the Union to extend benefits, prolonging the six-year “emergency” measure. But that's an old well to draw from, and it's easy to see why a mildly unpopular Democrat in the late stages of his presidency would go there.

The other such well Obama that went back to is the minimum wage, on which he called both the states and Congress to raise. His argument was one that will sway most Americans: “Americans overwhelmingly agree that no one who works full-time should ever have to raise a family in poverty,” he said.

And it's true that we do agree on that as a people. But we should also agree that that isn't a very accurate characterization of minimum wage-earners.

According to the Bureau of Labor Statistics, 2.5 percent of American workers make the federal minimum wage or less. (Many of those who make less are restaurant workers who end up making more than minimum wage after tips, so these numbers are generous.) Of this 2.5 percent, just 36 percent (or 0.9 percent of all American workers) work full-time. Only 49 percent of workers earning minimum wage or below are older than 25. Even more surprisingly, the family of the average minimum wage-earner brings in a combined $53,000 per year.

In other words, minimum wage is rarely a household's sole sustenance. It is typically the wage of students with part-time jobs and first-time job-seekers. Relatively few among the 2.5 percent are working full-time and raising families on the minimum wage, as Obama described them.

Equally important is that minimum wage is a temporary situation for most people, not a dead end. As the Heritage Foundation's James Sherk observed this month, two-thirds get raises (24 percent on average) within their first year.

The political benefit of promoting a minimum wage hike is obvious. Democrats are taking lots of heat over Obamacare and feel they can change the subject to an issue on which the public agrees with them.

But this policy is not victimless. If it becomes illegal to work for less than $9 per hour or $10.10 per hour, the people who will be hurt are the least-skilled workers, young people trying to establish a resume, and those living in lower-cost parts of the country.

An artificial 24 percent or 39 percent hike in labor costs (which those amounts listed above would cause to an employer that pays the minimum wage) could prevent whole classes of businesses from starting. It could also cause existing businesses to use more machines in place of new hires -- you don't even have to pay for their health care.

Even at the current minimum wage, this is already happening in the hospitality industry, which employs more than half of all workers earning minimum wage or below. McDonald's (which has already done this on a large scale overseas), White Castle, Chili's and Applebees are all currently introducing touchscreens or running pilot programs in U.S. locations.

Obama's policies have done quite a bit to encourage such innovation, and the minimum wage is more of the same. What it means is that the teenagers and entry-level workers of tomorrow will have a harder time finding work -- as will some others who might really need the money.

DAVID FREDDOSO, a Washington Examiner columnist, is the former editorial page editor for the Examiner and the New York Times-bestselling author of "Spin Masters: How the Media Ignored the Real News and Helped Re-elect Barack Obama." He has also written two other books, "The Case Against Barack Obama" (2008) and "Gangster Government" (2011).
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