"Fox News’ New Idea For Fighting Unemployment: Decrease The Minimum Wage"
Back in July, when a scheduled increase in the minimum wage from $6.55 to $7.25 per hour was about to take place, Fox News ran a segment examining how “the hike will hurt,” joining a media chorus about the supposed detrimental effect the increase would have on business hiring.
Now, with its Republican-inspired “Where are the jobs?” campaign in full swing, Fox has gone “on the job hunt” with a “new” idea for increasing employment: cutting the minimum wage. Jumping off from an op-ed by Washington Post editorial board member Charles Lane, Fox yesterday ran a handful of segments on the same basic premise — cutting the minimum wage may be the answer to the jobs dilemma. Watch a compilation:
Fox’s anchors seemed very pleased to have stumbled onto this line of thought. Of course, none of the anchors mention that almost all of the economic research on the subject shows that the minimum wage has little to no effect on employment. The most well-known researchers on the subject — David Card and Alan Krueger — examined a minimum wage increase in New Jersey, and found that “employment actually expanded in New Jersey relative to Pennsylvania, where the minimum wage was constant.”
Fox’s “brand new information,” meanwhile, is a study published last year by David Neumark of the University of California and William Wascher of the Federal Reserve that found that increasing the minimum wage may affect, by Neumark’s own admission, a “small number” of workers.
Of course, some employers would inevitably jump at the opportunity to hire workers dirt cheap and pay less than a minimum wage that already doesn’t lift a family of three out of poverty. It would actually take a minimum wage of $9.92 per hour to match the buying power of the minimum in 1968. “In today’s dollars, the 1968 hourly minimum wage adds up to $20,634 a year working full time. The new federal minimum wage of $7.25 comes to just $15,080.” That’s a total of $5,554 in lost wages.
And, if the minimum wage were decreased, how many employers would simply cut the wages of their current workers, at a time when consumer demand is already low? There are plenty of job creation ideas being bounced around these days, but you can count on Fox News to seize on one that would mean less money and a lower standard of living for workers.
Cross-posted on The Wonk Room.