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EPI Research Director Michael Saltsman on how an increase in the minimum wage would impact the economy and jobs.
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Well earlier today President Obama spoke of our huge deficit mentioning the importance of growth and jobs as a means to fix it.
We learned the night tonight it's.
When Bill Clinton was president nothing -- the deficit faster.
Then a growing economy the -- good middle class jobs.
That should -- are driving focus.
Making America a magnet for good jobs.
But to the president's policies actually help create jobs our next guest claims that one of the president's positions.
Could actually hurt job growth particularly in the one group hit hardest by unemployment.
Michael -- -- employment policies institute research director and he joins me now Michael good to see so the president.
Made a statement -- you know I think we all agree on that a growing economy would not only help jobs but it would also help our deficit but the president also wants this.
20% I guess it's a 24%.
Increase in the minimum wage what would that do to the jobs picture.
Well I think.
What it would do -- for the jobs picture specifically the jobs picture for the say less skilled employees like -- as it would reduce the number of opportunities.
And it's it's tied directly to the fact of the type of businesses that employ them and if you're.
3% profit margin.
I -- 24% increase in unit labor costs as you pointed out it can't just be absorbed insanity -- -- -- raise their prices or if they can't do that.
They have to provide the same product with less service and that's where you see this reduction employment opportunities for people like teens.
Well luckily we have -- the experiment has already been done we have seen what happens.
In the past when we raise the minimum wage in fact from 2007.
Until 2009.
We had several increases from five dollars and fifteen an hour up to seven dollars and 25 cents an -- as about a 40% increase.
After the July 2009.
Increment increased 600000.
Teen jobs disappeared.
In the following six months that seems to be a direct correlation now.
-- you know there's there's a couple of studies that look at that most recent minimum wage increase that have found job loss of of varying ranges -- anything goes beyond this most recent one.
If you look back over the last two decades or so about 85%.
Sort of the -- journal published research finds that some sort of job loss occurs after a higher minimum wage and so.
It's an empirical reality the White House is sort of tried to dodging in the way they've talked about this issue but the economic research doesn't -- -- I mean I think at a time when.
Unemployment for teens has been about 20% for over four years.
This is the kind of consensus he can't afford to ignore.
-- particularly among minority teens black youths are we have been hit particularly hard by these increases in minimum wage.
So much so the two researchers said the consequences of the minimum wage for black young adults without a diploma.
Were actually worse than the consequences of the Great Recession.
-- kind of puts it and -- focus.
It does you know in the -- there what ended it details of that study is actually compare.
Less educated black young adults with white young adults and finally 10% increase in the minimum wage.
Can reduce their employment by up to six point 5% loss only about 2.5 percent for -- young adults.
And this is this comes at a time when you -- -- we had in cities like Washington DC you know we have.
3435%.
Unemployment rate among teens even higher among African American teens.
So like -- -- data points like this are incredibly important that -- account especially when you're talking about.
A jobs agenda these are the sorts of policies attend the lop off sort of the bottom rung -- the -- -- the jobs latter.
Now we should we should mention by the way that most people who are making minimum minimum wage live -- households that are about.
Middle class wage about 45000 a year because they're they're the sons and daughters who've stayed on there.
But we already you point outer Wall Street Journal piece we already have a nine dollar minimum wage because you have to add -- to that the earned income tax credit explain that.
-- right so about you know one in six of the families that are earning the minimum wage right now.
Sort of fit the bill let's say a single parents supporting -- if you take that Stanley like a single parent with two children.
Near an income tax credit adds about 5200 dollars and their -- And and we've done that because we want to find effective ways to boost the wages of low income families.
The earned income tax credit does it to the attacks carried instead of through an -- employers.
And -- you can get that.
A boost in income without the unintended consequences of a higher minimum wage Michael Saltzman we have to leave it at that research director for the employment policies it's too good to see you Michael thank you very much -- can appreciate.
