Letter to the Editor

Wages and unemployment

Tuesday, August 20, 2013

On Aug. 12 the Southeast Missourian reprinted an article from Investor's Business Daily titled "Unemployed young people." Two of the points made in this article stated that among the reasons for a high unemployment rate for this age group was a 42 percent increase in the minimum wage since 2007 and that this contributed to pricing them out of the job market.

I would suggest to you that both of these points are grievously in error.

According to the U.S. Department of Labor, the federal minimum wage which was $5.85 in 2007 is presently $7.25. Rather than 42 percent increase, this is one of 24 percent.

Secondly, a February 2013 report by the Center for Economic and Policy Research (CEPR) reviewed studies of the impact of the increases to the minimum wage. The studies reviewed were from the 1990s through 2012. The CEPR report made the following conclusion:

"Economists have conducted hundreds of studies of the employment impact of the minimum wage. Summarizing those studies is a daunting task, but two recent meta-studies analyzing the research conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers."

I would suggest that the solution to the unemployment problem for all age groups is for the country to adopt governmental policies which will increase the rate of growth of the gross domestic product (GDP). Once the presently existing workforce is fully utilized, output cannot grow until firms begin adding workers.

JOHN PIEPHO, Cape Girardeau