GLENN: Are you trying to tell me that are you trying to tell me that when government does something, it doesn't work, it doesn't
STU: It does seem that we've crossed a barrier here because I think in the past you had this idea of government would try something that they thought would work and then it wouldn't work. Now we're at the point where they're doing things that they know admittedly won't work but at least it has it will start people talking about it. Or maybe some people will start thinking about these things in a different way. Why is government doing that?
GLENN: Yeah. Well, here's what happened, and gee, I think we predicted this. Remember last year we said if you increase the minimum wage, more people will lose their jobs. And if you remember right, Stu, who did I say would be the first to lose their jobs?
STU: You know, high school, college age workers.
GLENN: Okay. Why?
STU: Because they are the ones taking the minimum wage jobs.
STU: And because they are raising the minimum wage, they are going to have to cut some of those positions.
GLENN: Right. And if you are going to hire somebody and you are paying a little bit more, why not pay and get a little bit more skilled worker or a little more loyal worker. Okay. Wall Street was stunned Friday when the U.S. jobless rate jumped to 5.5 from 5% in April. How did things get so desperate so fast? How did we lose all of these jobs so fast? "Well, it's the price of oil, you know." "Oh, well, it's George Bush and his policies, you know."
Well, it turns out that the problem was hundreds of thousands of teenagers that were pouring out into the job market at the same time thanks to the end of the school year, but many, if not most, will not find jobs because they have been priced out of the market. This is from Investors Business Daily. The minimum wage was hiked 14% to $5.85 an hour last July. Next month it's going to go up an additional 12% to $6.55 an hour. In July it's slated to rise 10.7% to $7.25 an hour. Now, if that sounds like a lot, the actual cost is much higher after you fold in taxes, benefits, and Social Security that businesses pay on behalf of these teenage workers. So why is anyone in the country surprised that unemployment is rising? When you raise the cost of anything, you demand less of it. Why does everyone understand that with gasoline? For instance, we know as the price of gasoline rises this is what I just said a few minutes ago. You can't say that the price of gasoline is going to continue to head north because if it continues to head north, people are going to change their habits. Businesses are going to change their habits. Airlines won't be able to function the way they do. So the demand goes down and when the demand goes down, then the price goes down. Demand goes down the higher you raise the price. So if you raise the minimum wage, demand for minimum wage workers would go down. What a surprise. Only to those in congress. Since teenagers are the least educated, least trained, overall least productive of all workers, they are the least likely to be selected in the labor market. If you have to shell out an extra 40% over three years to employ the unproductive workers as is now happening, you are likely to find a good reason not to do so unless it's absolutely necessary.
This is from the University of California. An economist out there found the 10% minimum wage hike cuts employment of young and unskilled workers by 8.5%. He says in the last 11 months alone, the U.S. minimum wage has increased by more than twice that amount. So if we are expecting a 20% minimum wage hike, we can expect a 17% drop in employment in uneducated workers. It's crazy. Recent minimum wage hikes are the big reason teen joblessness is at the highest level it's been in 60 years. But who would have seen that coming? Besides anyone who had any experience in business at all, anyone? A day not in the classroom. A day out in the real world.