As the NSA scandal broke, countless pundits and citizens made references to George Orwell's "1984" and "Animal Farm."
I empathize with Boxer, the work horse from "Animal Farm," and millennials should too.
Millennials are to the United States what Boxer was to "Animal Farm": the engine that everyone else depends upon. The Baby Boomers are counting on us to finance their Social Security and Medicare checks, and now we're being called upon to subsidize their "affordable" health insurance as well.
Like Boxer, we are also being handicapped by ill-conceived public policy. In particular, minimum-wage laws hurt us economically and decrease social mobility. Raising the minimum wage would further the compound economic problems we see in today's labor markets by decreasing employment opportunities for entry-level workers.
Our friends on the left tout raising the minimum wage as a tool for eliminating poverty. President Obama pledged to raise the minimum wage from $7.25 to $9.50. Sounds like a no-brainer, but the data says otherwise.
Twenty-two percent of minimum wage workers live below the poverty line. Under current law, employers must pay workers at least $7.25 per hour; for a full-time employee working a minimum-wage job, this translates to a take-home pay of just $14,500 a year. Ironically, with the president's proposal, the aggregate yearly pay of a full-time minimum wage worker would rise to about $18,000 – still below the official poverty line.
The U.S. Census Bureau examined workers below the poverty line, with fascinating results. In 2012, 67 percent of individuals below the poverty line had not worked in the last year; 25 percent had only worked part-time in the past year. Only 9 percent of individuals below the poverty line had worked full-time in the previous 12 months.
What does this tell us? If the goal is to fight poverty, we need to focus on helping these individuals find full-time work rather than part-time or no work at all.
According to the Bureau of Labor Statistics, in 2012 the minimum wage was paid to 4.7 percent of hourly workers. The majority of these workers were under the age of 25, with 79 percent of them working part-time.
What can we extrapolate from these numbers? Firstly, not too many people are paid the federal minimum wage – most people earn more. Furthermore, most minimum-wage earners are not the sole breadwinners in their household. In fact, the BLS states 68 percent of minimum-wage earners have household incomes that equal or exceed 150 percent of the poverty line. These figures tell us most minimum-wage earners are teenagers working for extra money.
Entry-level jobs for teenagers are incredibly valuable. From my time in these positions, I've learned lessons only a job can teach, lessons that make me more attractive to employers. More importantly, these positions provide opportunities for people trapped in failing schools to gain the skills, experience and work ethic needed to elevate their station in life. Yes, these "dead-end" jobs provide opportunities for younger and inexperienced workers to get a foot in the door and build the foundation for a better career.
The empirical findings of countless studies on the effect of raising the minimum wage on youth employment point to a negative correlation between the two. Aspen Gorry of the Chicago School of Economics wrote an authoritative paper on this subject; he argued when you raise the minimum wage, you decrease the investment in younger individuals and decrease their human capital.
The federal minimum-wage law is the poster child for feel-good liberalism and poorly targeted public policy. It is an inefficient mechanism for lifting people out of poverty, and in fact has never been proven to reduce the poverty rate. Suburban teenagers would be the primary beneficiaries from an increase in it.
Additionally, raising the minimum wage decreases the number of entry-level positions available, and thereby has exactly the wrong effect on the job market at a time when jobs are needed more than ever before.
Our politicians should take a lesson from Boxer. It's OK that you depend on us to finance your retirement and your medical care. I get that. But don't make a difficult job even harder by limiting the number of jobs available to us.
Remember what killed Boxer? He was sold and processed into glue when he grew too feeble to work. Let's hope the correlations stop before we end up in a metaphorically similar situation.
Adam Prosise is a senior in economics. He can be reached at email@example.com.