Senate Defeats Minimum Wage Bill

The Senate yesterday defeated two bills that would have raised the minimum wage from $5.15, one backed by organized labor, the other one countered by some Republicans. The first bill would have raised the minimum wage to $7.35 over 26 months, while the second would have raised the wage to $6.25 over 18 months.

For some background on why raising the artificial floor on wages hurts the economy, be sure to read the Joint Economic Committee Report. Or just think about basic economic laws of supply and demand. If you want less demand for something, simply raise the price. The reports summary concludes:

The campaign to raise the minimum wage will have little positive impact on the lives of poor people. Rather, it is a political measure that plays to a misunderstanding of the impact of higher minimum wages. The future of the American economy depends on a correct understanding of the causes of prosperity. For too long, attempts to relieve poverty have been misguided. To lift people out of poverty, we need a system that maximizes opportunities for economic well-being of low-skilled workers. Raising the minimum wage is a wrong-headed solution that will deprive young, poor Americans of an opportunity to improve their economic situation.