Sen. Kerry’s Minimum Wage Plan Hurts Already Struggling Employees

  • Publication Date: June 2004

  • Topics: Minimum Wage

While our nation continues to produce jobs at a fast pace, low-skill entry-level employees face crippling unemployment rates. Today the Employment Policies Institute (EPI) unveiled a new website, www.gatewayjobs.com, which highlights the crisis in entry-level employment. Senator John Kerry’s recent proposal to increase the minimum wage to $7.00-an-hour will further hurt those individuals already struggling to find jobs.

Groups of traditional entry-level employees face significantly higher unemployment rates than all other employees, yet these groups would be hardest hit by a minimum wage hike. In May, the national unemployment rate was only 5.6%. In stark contrast, high school drop outs face an unemployment rate of 8.8%, teenagers are struggling with a rate of 17.2%, and most startling, African-American teens face an unemployment rate of 32.5%. Research by economists at Cornell University concludes that when you raise the minimum wage, groups such as these face significantly higher job loss than all other employees. For example, high school drop outs and African-American young adults suffer four times more job loss as a result of a wage hike.

Citing evidence consistent with EPI research, The Wall Street Journal recently chastised Sen. Kerry for proposing a minimum wage hike that would damage this vulnerable population. “How much worse does Senator Kerry want to make it?” asked the Journal. “Bill Clinton’s Small Business Administration followed a group of workers after the last increase in the minimum wage, in 1997, and found it slowed wage growth at small businesses and more than doubled the likelihood that low-wage workers at large firms would be unemployed. And that was at a time when the national jobless rate was falling rapidly and hamburger flippers in some places were earning $8 an hour.”

“Proposing to raise the minimum wage while entry-level applicants already face high hurdles to employment displays a disregard for the economic future of these low-skill Americans,” said Craig Garthwaite, EPI’s director of research. “Entry-level employment is a vital gateway into the labor force for millions of Americans. These jobs provide the basis for future wage growth and economic self-sufficiency. Gatewayjobs.com will continue to regularly update statistics detailing the employment market for entry-level employees, and will provide vital information about a host of government assistance programs designed to promote employment and economic success.”