Editorial: Minimum wage hike will increase prices and crime

Despite all the evidence that it will do more harm than good, a bill to raise the minimum wage in Nevada is still wending its way through the halls of the Legislature in Carson City.

Assembly Bill 456 would raise the minimum wage 75 cents per hour each year as it climbs from the current $7.25 per hour for those receiving company health insurance and $8.25 for those not insured until it reaches $11 or $12 per hour.

In his State of the State speech, Democratic Gov. Steve Sisolak called for raising the minimum wage and declared, “It’s impossible for an individual, let alone a family, to live on $7.25 an hour,” ignoring the fact almost no one “lives” on minimum wage. Fewer than 3 percent of workers are paid the minimum wage and most of them are under age 25 and working part-time. Most are supplementing family income rather than being self-supporting.

In fact, raising the minimum wage often results in jobs being cut and/or working hours reduced. One study found the average low-wage worker in Seattle lost $125 a month because the minimum wage was raised to $15 an hour.

Now, a recent study released by the National Bureau of Economic Research found that raising the minimum wage can harm even those who are not being paid the minimum wage.

Using national crime data from 1998 to 2016, the study found “robust evidence that minimum wage hikes increase property crime arrests among teenagers and young adults ages 16- to-24, a population for whom minimum wages are likely to bind.”

The study projects that raising the minimum wage to $12 an hour nationally would result in approximately 231,000 additional property crimes, costing the nation $1.3 billion. Raising the minimum wage to $15 an hour would generate over 410,000 additional property crimes and $2.4 billion per year in additional crime costs.

“We conclude that increasing the minimum wage will at best be ineffective at deterring crime and at worst will have unintended consequences that increase property crime among young adults,” the study authors concluded. They said that previous studies that projected a decrease in crime due to raising the minimum wage ignored the possibility of hours being cut and jobs being lost.

Don’t ignore the costs imposed on everyone when the minimum wage is hiked. A Cato Institute analysis in 2012 found that a “comprehensive review of more than 20 minimum wage studies looking at price effects found that a 10 percent increase in the U.S. minimum wage raises food prices by up to 4 percent and overall prices by up to 0.4 percent.”

The Congressional Budget Office in 2014 estimated that if the federal minimum wage were increased to $10.10 an hour — as proposed by President Obama and others — up to a million workers would lose their jobs.

According to the American Enterprise Institute, when the minimum wage rose 41 percent between 2007 and 2009, the jobless rate for 16- to 19-year-olds increased by 10 percentage points, from about 16 percent in 2007 to more than 26 percent in 2009 — even higher for minorities.

Without those entry level jobs younger Americans cannot build the skills needed to earn higher pay for a lifetime.

Still another Heritage study reported that every dollar increase in minimum wage really only raises take-home pay by 20 cents once welfare benefits are reduced and taxes are increased.

It’s the immutable law of unintended consequences. Lawmakers should abandon their support for this bill, which would cause more harm than good.

A version of this editorial appeared this week in some of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record.

Obama’s prescription for adding jobs would actually kill jobs

Obama went on the radio this morning and told Americans the good news that businesses added 273,000 jobs in April — when you add in public sector jobs the Bureau of Labor Statistics said 288,000 jobs were added.

Obama went on to say:

“But we need to keep going – to create more good jobs, and give middle-class families a sense of security.  And I want to work with Congress to do it.

“But so far this year, Republicans in Congress have blocked or voted down every serious idea to create jobs and strengthen the middle class.  They’ve said ‘no’ to raising the minimum wage, ‘no’ to equal pay for equal work, and ‘no’ to restoring the unemployment insurance they let expire for more than two million Americans looking for a new job.”

But none of those ideas would create jobs. They would kill jobs. The Congressional Budget Office reports that the minimum wage hike could kill as many as half a million jobs. The only jobs the equal pay provision would effect are those of trial lawyers, while the rest of the economy would bear the costs in the form of fewer jobs. As for extending the length of unemployment insurance, why do you think there were 288,000 jobs added in April? Perhaps because a few of the “two million Americans looking for a new job” and without a paycheck since January are now willing to take whatever part-time menial work comes their way?

Yes, the unemployment rate fell from 6.7 percent in March to 6.3 percent in April, but this was entirely due to the fact 806,000 Americans gave up looking for work and exited the labor force entirely. The number of people not in the labor force has grown by more than 2 million in the past year alone.

While the BLS survey of business shows the economy added 288,000 jobs in one month, the survey of households — admittedly a smaller sample with a higher margin of error — shows 73,000 jobs were actually lost.

Whatever the numbers are, Obama’s prescription for adding jobs would have the opposite effect. And just wait till ObamaCare’s many delayed requirements kick the economy in the arse and peel off hours worked to the tune of 2.5 million full-time equivalent jobs. It is called the reverse Midas Touch.

BLS household survey data

BLS household survey data

You can pay attention to the facts or swallow Obama’s rhetoric:

“But we could do a lot more if Republicans in Congress were less interested in stacking the deck in favor of those at the top, and more interested in growing the economy for everybody.  They’ve now voted more than 50 times to take apart the Affordable Care Act – imagine if they voted 50 times on serious jobs bills.

“That’s why I’m going to take action on my own wherever I can.  To grow our economy from the middle-out, not the top down.  To give every American who works hard a chance to get ahead.”

Hey, Harry, tell Obama to get on script. He forgot to mention the Koch brothers.