Minimum Wage Laws: Helpful or Hurtful?

It's hard to argue that any law that can potentially elevate people from poverty or substandard living conditions is bad. Such, however, is the case with the minimum wage laws of our nation, which began in 1938 with the Fair Labor Standards Act (FLSA) and have now taken root not only in state legislatures but in city halls as well.

The effectiveness of these laws is--seven decades later--fair game for debate. Some argue that minimum wage laws have no adverse effect on employment of certain groups of people (such as the unskilled and the young), while others maintain that minimum wages reduce employment at the fringes.

A lot of it depends on one's political perspective and/or business involvement (owner, manager, et al.).

Now comes a book by a professor of economics at UC Irvine and an associate director of research for the Federal Reserve, which argues that minimum wage laws indeed lower employment and reduce (not raise) wages overall.

In Minimum Wages, David Neumark and William Wascher argue that their two decades of research reveal that these laws do not achieve their goals. Instead, they reduce employment opportunities for less-skilled workers and tend to reduce their earnings; they are not an effective means of reducing poverty; and they appear to have adverse longer-term effects on wages and earnings, in part by reducing the acquisition of human capital.

Still, there's no stopping the political will power to raise the minimum wage. The federal rate will go up to $7.25 next July 24, while states and even municipalities are beating that figure and that onset date with minimum wage laws' taking effect on New Year's Day. Washington is the highest of the states at $8.55 an hour, while San Francisco--at $9.79--and Santa Fe--at $9.92--are highest overall.

I've certainly seen many anecdotal news videos in which business owners say they've already laid someone (or someones) off in anticipation of the new minimum wages, spreading their work around or doing it themselves, to lead me to believe that minimum wage laws can indeed backfire.

However, politics is politics, and the minimum wage phenomenon is here to stay.

Up next--the minimum wage as living wage?

More Pain on the Labor Front

When I left home a little after 5 a.m. today, the panel on CNBC was predicting a job loss total for November of 350,000. By the time I got to my office, the actual figure of 533,000 newly unemployed had been announced by the DOL. Stocks, natch, immediately began plunging.

Not since December 1974 has the nation witnessed such a dreadful month on the employment front. The total for the year now stands at 1.91 million jobs lost. It would take a record-breaking December to push us over the 2 million mark. Small comfort in that, though, as jobs will continue to be shed as the nation comes to grips with its new economic reality.

As much as I keep telling myself that recessions cure a lot of the economy's--and society's--ills, that doesn't reduce the anxiety or reality of what's going on very much, either for me personally or for anyone who reads this, and certainly not for anyone who loses his or her job.

What next?

The automaker swan song is already upon us, and there's no way Detroit 2009 will resemble anything in 2008. That transformation, as much needed as it is, will have ripple effects throughout many supporting and consuming sectors of the economy.

I don't want to predict the next crisis, but many commentators are already forecasting a credit card default wave rivaling the ongoing foreclosure crisis.

We are all now living through that ancient Chinese curse: "May you live in interesting times."

Hang on to your seats for a bumpy ride.

The Never-Ending Regulation Mill

Anyone out there ever try keeping up with all the workplace regulations foisted on us business owners by the federal and state (and sometimes local) governments?

Try reading through the latest iteration of the Family and Medical Leave Act (FMLA) that came out Nov. 17, 2008.

You need a guidebook to wade your way through it, so why bother? Don't we have better things to do, like surviving in a challenging economy?

Fortunately, we don't have to spend hours and days pouring through these gov regs, as I call them.. There are a bunch of Web sites, blogs and newsletters that can help yus cope with complying with workplace regulations.

I have several such sites bookmarked on my browser, but I also rely on Personnel Concepts to keep me informed, which they do quarterly, and daily on their site. They do the research and then keep me up to date.

There are other providers out there that I've checked into, but Personnel Concepts seems to have been around longer and honed their skills better.

More on keeping up in future posts.