Labor's minimum-wage mind games
President Obama's sudden support of the Senate's $10.10 minimum-wage bill is partisan politicking of the worst kind. It's a desperate attempt to distract the public from the Affordable Care Act's dismal polling numbers — and it ignores the simple fact that such a wage hike would be similarly disastrous to the small businesses that employ much of the minimum-wage workforce.
The president has tried to cover up this fact via a savvy public-relations campaign from his Department of Labor. Over the past few months, the department unveiled a “Minimum Wage Mythbusting” education campaign ostensibly geared to debunk what it claims are misconceptions about raising the minimum wage.
Despite its name, this campaign supposedly focused on busting myths is, itself, chock full of them. So flawed are Labor's analyses that even the government's own data contradict the “facts” included in Obama's public-education campaign.
Start with Labor's claim that “the typical minimum-wage earner is not a high-school student earning weekend pocket money.” The department's email used this to set up a discussion about minimum-wage earners supporting families.
But this is misleading: High school or not, the Bureau of Labor Statistics — which at last check is part of the Department of Labor — says that minimum-wage earners “tend to be young.” More than half are between the ages of 16 and 24, and about 1 in 4 is a teenager. (The ratio of teens to adults is 1 in 20 for the entire hourly workforce.)
In other words, the “typical” minimum-wage earner is either in high school or is a young adult who is just a few years out of school.
Moreover, most minimum-wage employees are either living at home with family or have a spouse who earns a higher income. The average family income in these households is close to $50,000 a year.
The Department of Labor's sleight of hand on this “myth” pales in comparison to its academic malpractice on the question of minimum wages and employment. It labels “not true” the claim that wage hikes reduce employment for less-skilled job seekers, even though 85 percent of the best economic research on this subject from the last two decades says otherwise.
Labor also ignores the findings of Congress' Minimum Wage Study Commission, which established conclusively in a seven-volume report that each 10-percent increase in the minimum wage reduces employment for young people by as much as 3 percent.
A mistake of this magnitude might be understandable in a freshman economics class, but it's baffling coming from the government agency whose job it is to understand how labor markets work. Given its answers to other questions, though, it seems Labor is more interested in scoring partisan points than in evaluating policy.
Had the Labor Department and the president, who appoints its secretary, been less interested in making a political point, they might have noticed those inconvenient economic details. Instead, they chose political pandering over sound public policy.
Michael Saltsman is the research director at the Employment Policies Institute.