Minimum Wage Increase to Wipe Out 500,000 Jobs

“Boosting the federal minimum wage as President Barack Obama and congressional Democrats are proposing” would “cut employment by roughly 500,000 jobs, Congress’ nonpartisan budget analyst said Tuesday”; the Congressional Budget Office predicts that a minimum wage increase will result in “fewer jobs, especially for low-income workers; higher costs for business owners and higher prices for consumers. The study was unveiled as the Senate prepares for a March debate on a plan by Sen. Tom Harkin, D-Iowa, ramping up the minimum in three steps to $10.10 by 2016.” (Source: Associated Press).

Raising the minimum wage also drives up unemployment among young people and unskilled workers. This CBO report comes on the heels of an earlier CBO report that predicts a fall in employment of about 2 percent over the next decade due to work disincentives contained in the 2010 healthcare law. Obamacare has caused layoffs in the medical device industry, and will wipe out many jobs. It is also replacing full-time jobs with meager part-time jobs in community colleges, restaurants, and other sectors.

A 2013 study concluded that federal regulations make Americans 75 percent poorer. Earlier in the Obama presidency, Wayne Crews of the Competitive Enterprise Institute wrote that “Obama’s record-setting red tape costs Americans $14,000 annually,” a figure that has risen since then. For example, the EPA alone “added 223 rules in 2012,” with an “estimated compliance cost” of “$353 billion.” These costs will likely be dwarfed by additional regulatory costs in the future from laws backed by Obama, such as the 2010 healthcare law, and the Dodd-Frank Act, a 2,315-page measure whose massive costs are just starting to be felt and have yet to be tallied. Just one of its rules is expected to “cost American businesses $315 billion and increase annual borrowing costs by $43 billion,” according to the Financial Services Roundtable. It has already wiped out thousands of jobs and harmed the poor.

More regulations mean fewer jobs. A liberal Yale professor recounts being told by a businessman that he would not hire more employees despite having a “successful business” due to the current political and regulatory climate. “How can I hire new workers today, when I don’t know how much they will cost me tomorrow?” asked the businessman, “referring not to wages, but to regulation: He has no way of telling what new rules will go into effect when. His business . . . operates on low margins. He can’t afford to take the chance of losing what little profit there is to the next round of regulatory changes. And so he’s hiring nobody until he has some certainty about cost.”

Boston business owner Terry Catchpole noted in The New York Times that economic uncertainty due to Obama administration policies has wiped out jobs at companies like his:

Two years ago our executive communications company had 17 employees. Today it has seven . . . like many small businesses, we are dependent on big businesses as customers. And the big businesses that we would ordinarily depend on to become clients are sitting on their cash, because they are deathly afraid of an Obama administration that has been hostile to business . . . They have no idea where the administration’s next attack is coming from, and how much it is going to cost them to defend. So businesses do not spend money; they do not hire my company; and we cannot hire back those 10 good people we had to let go.

Democratic businessman Steve Wynn called Obama “the greatest wet blanket to business and progress and job creation in my lifetime,” saying that “the business community in this country is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody’s going to be sitting on their thumbs.”

Even agencies that lack the power to adopt much in the way of formal regulations effectively do so by adopting “guidelines” that interpret statutes to impose burdensome obligations never intended by the Congress that enacted them. The classic example is the federal Equal Employment Opportunity Commission, which is discouraging hiring by creating a bad legal climate for employers. It has pressured employers, such as nuclear power plant operators, to hire people with criminal records as armed guards, even when they are prohibited by state law from hiring felons for such positions, as Jim Bovard noted in The Wall Street Journal, discussing the EEOC’s proceedings against a nuclear-plant operator that had refused to hire a twice-convicted thief. The EEOC sued Pepsi for doing criminal background checks, forcing the company to pay $3.1 million to settle the lawsuit.

The EEOC is threatening employers who require high-school diplomas with ADA lawsuits. Employers’ ability to hire and fire based on merit has been under assault by the EEOC, which has ordered employers to discard useful employment tests and accommodate incompetent employees. A hotel chain was recently compelled to pay $132,500 for dismissing an autistic desk clerk who did not do his job properly, in order for it avoid a lawsuit by the EEOC that would have cost it much more than that to defend.

The EEOC has sued companies that refuse to employ truck drivers with a history of heavy drinking, even though companies that hire them will be sued under state personal-injury laws when they have an accident. The EEOC used the threat of costly litigation for force a cafe owner to pay thousands of dollars for not selecting a hearing- and speech-impaired employee for a cashier’s position.