The following opinion piece by Dwight Lee, the William J. O’Neil Endowed Chair in SMU's Cox School of Business, appeared in the February 21, 2013, edition of The Wall Street Journal.
February 22, 2013
BY DWIGHT LEE
President Obama called in his State of the Union for an increase in the minimum wage to $9 an hour by 2015, from $7.25, notwithstanding the evidence that it will increase unemployment among young, entry-level workers. This push by Mr. Obama and his congressional allies is especially difficult to understand because they clearly appreciate how valuable it is for young people to gain workplace experience and make connections that can lead to career opportunities.
Internships at the White House, on Capitol Hill and elsewhere in Washington introduce thousands of young people to working in government and to the discipline and industry needed to function in any workplace. Yet these unpaid positions are almost by definition reserved for the offspring of the well-to-do who are least in need of such an advantage.
Another advocate of a higher wage floor is Sen. Al Franken (D., Minn.)—except in his congressional office. The Democrat promises that "interns will receive unique career development opportunities." But that first rung on the ladder comes with this caveat: "All internships are unpaid."
Reps. Jerrold Nadler and Charles Rangel are both Democrats from New York, and they share the same policy: "Although all internships in all offices are unpaid, students gain invaluable work experience."
Then there is Sen. Sherrod Brown (D., Ohio). "Interns in my Washington, D.C. office work on a wide range of projects," prospective applicants are told. But the young folks are on their own when it comes to expenses: "internships in my Ohio and Washington, D.C. offices are unpaid. In addition, we are unable to reimburse you for parking and mileage."
The White House also offers an internship that "is designed to mentor and cultivate today's young leaders, strengthen their understanding of the Executive Office and prepare them for future public service opportunities." The pay for these promising positions is zero.
The president and other champions of a higher minimum wage clearly recognize the value of entry-level work. Washington interns do much of the phone-answering and mail-processing chores that await first-time jobholders in offices across the land. An entry-level job is much more important for many young people than making a little summer money. It is the best opportunity they have for getting the training to develop skills they need to earn a good income later in life when they will have more financial obligations.
Increasing the minimum wage would make this path to a better financial future harder than it needs to be for the young people who already face the most difficulty. These are the young who don't have the advantages of a stable family life, parental role models at home, and teachers in good private or public schools instilling in them the joy of learning.
These young people don't have the financial security to go to a university right out of high school and then continue on for a professional degree. And they can't afford to take unpaid internships, whether in Washington or with nonprofit organizations.
For these young people, the first jobs they find are seldom those in which they start out being productive enough to be worth even the current minimum wage of $7.25. The teenage unemployment rate reported in January was 23.4%, according to the Bureau of Labor Statistics. One wonders how much higher it has to go before Washington wakes up.
Maybe the politicians don't want to wake up. Raising the minimum wage is usually a political winner—only a Grinch would oppose helping low-income workers, right? But the appeal is to emotion, not to the practical, long-term interest of helping the disadvantaged.
Rep. Maxine Waters (D., Calif.) is a case study in the Washington approach. Rep. Waters, who like so many of her peers offers unpaid internships, celebrated the passage of the Fair Minimum Wage Act of 2007—raising the rate of the minimum wage to $7.25 from $5.15—with a House floor statement. "The economic gap between the rich and poor is growing. Too many people are living at or below the poverty line," Rep. Waters said. "When we pass this bill, we will all feel better about ourselves."
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