Killing the goose that lays the golden egg

July 25, 2009

Widely reported was how the unemployment rate for June in the Chicago metropolitan area reached 11.3%, the highest since 1983. 

Little noted is that on the same day the Obama administration allowed an increase in the federally mandated hourly wage to $7.25, which would create about $120 a month in extra disposable income. 

Why are the two events in conflict with each other?  When the government forces firms to pay workers more money, it has to come from somewhere.  And that somewhere is usually lost jobs and lost opportunity for low-skilled workers.

The unemployment rate for adults without a high school diplomas has risen to 15.3%.  Very often low paying jobs provide unskilled workers with the work experience needed to move up the career ladder.  This increase in the minimum wage hike will undoubtedly hit the most vulnerable the hardest.

As such the wage hike can be likened to killing the goose that lays the golden egg.

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