The proposal from President Obama and his liberal allies in Congress to raise the minimum wage to $10.10 would cost the US Economy about half a million jobs, and would likely help only a small percentage of Americans.
Have you ever wondered why raising the minimum wage would take away jobs? Let’s explore that just a bit.
Suppose that your mother baked a pie (Cherry, because it’s delicious. Haters gonna hate.) for you and 5 of your friends. Divided evenly, you each get 1/6th of the pie. But if your pesky mother insists that everyone gets 1/5th of the pie, and, well, you probably shouldn’t have asked over the guy from your gym that you want on your pick-up basketball team.
The same holds true for labor investments. Admittedly it’s a much larger pie, but the principles still remain—raise the minimum wage (mandate larger slices) and there’s less to go around.
Aside from losing 500,000 jobs, the CBO also estimates that nearly 1 Million American Workers will see a decrease in their earnings (due to fewer hours, etc.), and the US deficit will likely increase in the long-run.
So who really wins? It’s certainly not the struggling American middle-class. What they really need is a plan that frees up employers to promote broad-based growth for everyone, and Conservatives need to be the ones who offer solutions that help can get the country back on track.