In hot markets where there’s a labor shortage already, like Florida, expanding businesses probably already were paying a premium above the minimum wage any way to stay in business. Therefore the increase didn’t really have much impact. In that case “so much for the theory that raising the minimum wage DOESTN’T affect unemployment.” By definition the market had already established a minimum wage and government legislation did not tamper with the market forces at work.

In other words, if the prevailing wage for entry level unskilled work in a particular area is at or below the enforced “hike”, of course it won’t have a discernable impact on immediate unemployment.

Unemployment figures don’t show the impact of people out of the workforce trying to get in though… people on Temporary Assistance To Need Families who because they were not on the unemployment roles were not counted, teens entering the job market who’ve never worked before, and seniors trying to get back in because of the erosion of retirement income who may have few marketable skills may be hurt but not be counted as casualties.

Raising minimum wages can also encourage youth drop out rates to be incrementally higher because the wages seem “livable” to teens who – as a result – don’t see the need to continue in High School.

In cold market places like declining urban and stagnant rural areas, where entry level positions are at the minimum wage level and there’s a surplus of unskilled labor, I fear for the impact on small business.

But thank you for helping me think more clearly: My fear is that “Government mandated minimum wage increases above the wage levels previously dictated by market forces will raise unemployment.”

For readers wanting to hear other economic perspectives, you might check

http://www.heritage.org/Research/Economy/wm1176.cfm

or

http://www.mises.org/story/2130

Here, it will hurt small business.

And as I noted, I’m talking about the most vulnerable workers – that real person in front of me who will likely get canned.

But it’s nice to know our legislators in Washington were actually afraid of meddling in one aspect of the economy and our lives – at least temporarily!

Interestingly, though, in the states that have taken matters into their own hands and raised their statewide minimum wage, those scare tactics have turned out to be just so much dyspepsia.

In Florida, for exampple (not exactly a bastion of blue-tinged politics), the minimum wage is $6.67, which is $1.52 more than the current federal rate. It has been raised twice in recent years — first by a constitutional amendment approved by voters in 2004 and again in January or this year.

Yet, Florida’s unemployment rate is WAY below the national rate, at only 3.2%. In fact, according to information provided online by the state, “Based on the latest nationwide data, Florida had the fastest job growth rate and lowest unemployment rate of the ten most populous states and added the highest number of new jobs of all states in the nation.”

So much for that theory.