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Minimum wage bill dies in U.S. Senate today

Today, April 30, 2014, the U.S. Senate voted down a bill which would have required companies to pay a minimum of $10.10 per hour to their employees from the current $7.25 per hour. The Democratic bill needed 60 votes to advance and failed with a vote of 54 to 42. The only Republican on record voting in favor was Tennessee Senator Bob Corker. Had the legislation moved forward it would have affected approximately 1.5 million workers in the U.S.

Although 67% of Americans are in favor of increasing the minimum wage as a concept, when asked if they would still be in favor if it cost American jobs, it caused support to drop to 38%. When it comes to paying for a higher minimum wage, 38 percent say companies would raise their prices, 32 percent say companies would lay off workers, 18 percent say they’d reduce executive salaries, and 6 percent say firms would accept smaller profits.

As much as Democrats would like to denigrate Republicans for their votes today in the Senate, the bill would have died in the U.S. House. Last year while appearing on the Charlie Rose show, Florida U.S. Senator Marco Rubio said, "I support people making more than $9. I want people to make as much as they can. I don't think a minimum wage law works. We all support -- I certainly do -- having more taxpayers, meaning more people who are employed. And I want people to make a lot more than $9 -- $9 is not enough. The problem is you can't do that by mandating it in the minimum wage laws. Minimum wage laws have never worked in terms of having the middle class attain more prosperity." Around the same time, U.S. Republican House Speaker John Boehner agreed with Rubio saying, "When you raise the price of employement, guess what happens? You get less of it."

The non-partisan Congressional Budget Office (CBO) said the minimum wage hike would likely increase unemployment in the U.S. which could translate to as many as one million jobs over the next two years. One cause the CBO cites is business transferring the extra cost onto consumers.

Earlier this month, Libertarian Party Political Director Carla Howell, called for an end to the government-mandated minimum wage saying that “government bureaucrats are not qualified to say who is, or is not, qualified for a job. Only employers can and should make that decision. This will allow poor people to get jobs they want – that the government says they’re not allowed to have."

Others suggest the minimum wage increase will cause less workers to be needed as the extra cost would be the tipping point to employing more automation in the workplace. This could be improvement in robotics technology and increased use of paperless technologies.

William Poole of the CATO Institute stated in an article earlier this year:

"Consider the following common-sense thought experiment: Suppose Congress were to enact a minimum wage $50 higher than the current one of $7.25 per hour. Would a minimum of $57.25 reduce employment? I know of no economist who would assert a zero effect in this case, and recommend that readers ask their economist friends about this thought experiment. Assume that the estimate is that a minimum of $57.25 would reduce employment by 100,000. The actual number would be far higher but 100,000 will do for this thought experiment. Now, consider several other possible increases of less than $50. The larger of these increases would have substantial effects, the smaller ones smaller effects.

But is there reason to believe that a minimum of $10 would have no effect? I have never seen a convincing argument to justify that belief. If you accept as a fact that a minimum wage of $57.25 would reduce employment, and you accept as a fact that some workers are currently paid $7.25 per hour, then logic compels you to believe that a small increase in the minimum wage above $7.25 will have at least a small negative effect on employment.

The only escape from this logic is to believe that there is a discontinuity in the relationship between the minimum wage and employment. No one has offered evidence that there is a discontinuity at a certain minimum wage such that a minimum above that has an effect and one below does not."

The Libertarian Party, in their official platform, states: "We support repeal of all laws which impede the ability of any person to find employment. We oppose government-fostered forced retirement. We support the right of free persons to associate or not associate in labor unions, and an employer should have the right to recognize or refuse to recognize a union. We oppose government interference in bargaining, such as compulsory arbitration or imposing an obligation to bargain."

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