CNN Calls 'The People' Winners in Calif. Minimum Wage Hike

     “A three-year battle over the minimum wage is now over,” and “it looks the people won,” CNN’s Heidi Collins flatly declared a few minutes before noon on the September 13 edition of CNN “Live Today.” But in doing so, Collins blindly accepted a liberal talking point about the minimum wage.


     Collins was introducing Susan Lisovicz at the New York Stock Exchange for a business update. Lisovicz agreed that “the people won and perhaps the politicians won” with the signing of a minimum wage hike in California.


     “The new law will make California’s minimum wage the highest in the country by 2008 when it goes to $8 an hour.”


     But economists say the winners and losers are not as clear-cut as Collins and Lisovicz said. While some low-wage earners will benefit from a higher wage, the artificial wage floor could push other workers out of jobs as the cost of labor goes up, forcing some businesses to lay off workers or freeze hiring.


     As the conservative Heritage Foundation’s Dr. Tim Kane noted in a March 4, 2005, WebMemo, “A survey published in the Winter 2005 Journal of Economic Perspectives, an academic publication” finds that fully “71 percent of economists at America’s top universities agree with the statement ‘a minimum wage increases unemployment among the young and unskilled.’”


     What’s more, as economist David Neumark has found, there are negative “longer-run effects” of minimum wages on young workers.


     “The evidence indicates that even as individuals reach their late 20's, they work less and earn less the longer they were exposed to a higher minimum wage, especially as a teenager,” Neumark argued in the abstract of his study.


     In other words, an artificial wage floor changes the natural pressure low wages put on unskilled or low-skilled young workers to develop their work skills and in so doing command higher wages.