Do Minimum Wage Hikes Kill Jobs?

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And yeah always controversial issue of minimum wage a growing number of states.

Are looking to hike their minimum wage in nine states already increase -- January 1.

And another seven states and the District of Columbia are now looking to -- up their rates to.

But could actually destroy low income jobs and raise unemployment.

Yeah that's the number people like that Manhattan institute.

Of the show -- -- it's always my reaction this idea of raising the minimum wage which sounds great you know you want to raise wages for workers.

But I feel like you know places only have a certain amount of income to spend on labor so there they're gonna fire workers a raise the price their products in order paper that -- it.

Well it's very politically popular but it's also probably one of the most studied issues in the world economically.

And the vast majority of studies show that when you raise the minimum wage you essentially destroy low wage jobs mostly for teenagers and people like -- the reason you do that of course.

Is because government can tell business -- need to raise that that you know your rates but he can't actually give that they're not actually giving them the money to do.

The money comes from somewhere -- money doesn't come out of thin air and has -- for example I think we went ahead to trying crunch the numbers we use the example of McDonald's.

-- that's a place where you would see minimum wage in effect.

I'm looking at Maryland Maryland is a place where they want to raise the minimum wage by two dollars and 75 cents is actually being considered.

That's a -- it's a lot yeah that's a lot.

So weak and crunched through all the numbers if you had to do that per hour he looked at how many employees they haven't you looked at the extra outlay of money and a typical McDonald's store would have to fire seven workers.

In order to have the same labor costs and I think that's what they would do.

Well how well.

Let you know there's only so much money to go around and in fact to get you talk about mcdonalds that today franchisees are at least supported by McDonald's -- the majority small businesses.

Ardent don't even have that kind of support its references are -- example didn't the Gallup index.

Of hiring for small businesses in January.

Small businesses are still net.

Firing more people than our hiring they wow still alive yes exactly so that this isn't really a very difficult time and you know what it ultimately raises the minimum wage yeah.

Economic growth -- right -- in North Korea North Dakota which is of course booming right now Wal-Mart is paying seventeen dollars an hour for new employees.

Right -- they have to.

Whenever I have this conversation with people who are in favor of -- they say.

Well -- -- raise the price and people are happy to pay a higher price because they know that the workers are are getting more of the money in are doing better.

Identified by that but in this case in particular again -- just wanna look at the example -- -- you know straightforward map of Maryland raising it two dollars and 75 cents.

You would have to raise the price of a big Mac to five dollars and -- seven cents it would be a 42% increase the price.

A dollar 65 a big Mac in order to cover the cost and do you think people -- raising the price drop that much because liberals always say they wouldn't mind.

They want to see the workers have a living wage.

That we know the answers that question and basically if people would happily pay more than it would be but buying clothes made in China it would be buying clothes made overseas.

I was reporting in the ninety's for instance.

On the buying American movement in American stores were even Wal-Mart had a whole section American closed.

I had to abandon it because people did not bar people did buy on price so I mean I think it's politically popular people -- -- I'll do it but they don't.

Actually vote with their money that way any abstract you wanna -- what -- -- reality.

So I mean the same time when people say it's not a living wage you know -- you make seven dollars and 25 cents an hour even if you work fifty hours a week.

You're still only making 181000 dollars 850 dollars and here.

That's not really enough to live on the atmosphere is or grow the Holocaust that that's true but there are also a couple of other -- first all the vast majority of people who -- minimum wage or like third or fourth -- second third or fourth earners are not.

They're not heads of households and they're basically a lot of them -- teens and so forth.

But in the case where you do you have heads of households earning just that little we have other ways of helping them and most importantly the -- favours the earned income tax credit.

Which basically says if you're working full time and you're only earning this much money we the government are gonna give you more for.

A subsidy to reward for work in new did you continue working because you only get that if you work until he gets the point where you are anymore.

And that of course the -- problem with that is priests politicians have to put that money aside in -- budget.

To pay for that -- a lot easier to just say let's raise the minimum wage -- that.

But it doesn't have the same impact as you point -- -- thank you so much -- my pleasure -- Our here's our money --

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Do Minimum Wage Hikes Kill Jobs?

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