Classic Stossel: Minimum Wage — Transcript

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1. 0:00Protesters and politicians agree, wages
2. 0:03should be higher.
3. 0:04It's a fairness issue.
4. 0:07For years, America's minimum wage was
5. 0:09$5.15
6. 0:11an hour. A couple of years ago, Congress
7. 0:13raised it to $7.25.
8. 0:15Progressives say it should be higher.
9. 0:17Absolutely.
10. 0:18What would that be about?
11. 0:20be about $9 an hour.
12. 0:22Well, it's a nice idea.
13. 0:23Economist Russ Roberts points out
14. 0:25setting minimums has unintended
15. 0:27consequences.
16. 0:29First reaction is Great, I got to get a
17. 0:30raise. This is fantastic. I'm finally
18. 0:32going to be able to buy this, that, and
19. 0:34that, take care of my kids. And that of
20. 0:35course is part of the political appeal
21. 0:36of the minimum wage.
22. 0:37That's the seen benefit.
23. 0:39That's the seen benefit, if you keep
24. 0:40your job.
25. 0:41What happened if the government forced
26. 0:42my company to increase wages?
27. 0:44Are you guys happy? You want that?
28. 0:46Aren't you guys aren't you aren't you
29. 0:47underpaid? Come on. So, absolutely. I
30. 0:49mean, there's no doubt about it. So,
31. 0:50let's give them a 50% raise. Your first
32. 0:52thought is, that's awesome. 50%. Your
33. 0:55second thought is, I wonder if they're
34. 0:56going to keep as many camera people as
35. 0:57they had before.
36. 0:58We quit uh hiring people without
37. 1:00experience.
38. 1:03Merv Cris runs the Prime Cut, a
39. 1:05combination meat counter and bar in
40. 1:08Bakersfield, California.
41. 1:09Minimum wage jobs are an entry-level job
42. 1:12to get someone some experience to do
43. 1:13something. You raise that high enough,
44. 1:14you cut those people out of the market
45. 1:16completely.
46. 1:17When California's minimum wage rose to
47. 1:19$8 an hour, he stopped hiring new
48. 1:21people. Low-wage jobs used to be a way
49. 1:24for kids and the unskilled to get into
50. 1:27the labor force, to prove themselves.
51. 1:30Most every gas station used to offer
52. 1:32free window cleaning. Not anymore.
53. 1:35The construction industry used to be a
54. 1:36place teens could get a foot in the
55. 1:38door, learn the discipline of regular
56. 1:41work. But the minimum wage left many
57. 1:43teens out of jobs. No wonder teen
58. 1:46unemployment is now 25%.
59. 1:49If they were to get rid of the minimum
60. 1:50wage, we could easily hire more people.
61. 1:52Warren Myers manages public parks. When
62. 1:55the minimum wage went up, he replaced
63. 1:57workers with machines.
64. 1:59We're trying them out now, trying out
65. 2:00various automatic gate solutions. I much
66. 2:02prefer having a person because that
67. 2:04person can can be friendly and provide a
68. 2:06smile, and they can provide information
69. 2:08about the park, and they can answer
70. 2:09questions, and where are the bathrooms.
71. 2:11But,
72. 2:12with a higher minimum wage, he switched
73. 2:14to automated ticket machines. Fewer
74. 2:17people, more unemployment. In fact,
75. 2:19unemployment has risen more in states
76. 2:22that raised their minimum wage.
77. 2:24What would happen if we threw out the
78. 2:26minimum wage?
79. 2:26Oh.
80. 2:27Oh my goodness.
81. 2:28What that leaves is an employer in the
82. 2:30catbird seat to drive that wage as low
83. 2:34as possible.
84. 2:35But, wait a second. These businesses
85. 2:37would like to pay their employees as
86. 2:39little as possible, but they must pay
87. 2:41more than minimum wage cuz good workers
88. 2:43have choices.
89. 2:48At this bowling alley restaurant, most
90. 2:50workers make more than the minimum, but
91. 2:52they didn't start there.
92. 2:53I was minimum wage as dishwasher,
93. 2:56which was like um
94. 2:58$3.75, $4, somewhere It's been a while
95. 3:01back.
96. 3:01Now, he makes more than $10 an hour.
97. 3:04Why is it that only 5% or less than
98. 3:06American workforce earns the minimum
99. 3:08wage? The other 95, 97% that earn more,
100. 3:11why are they being paid so much? Is it
101. 3:13because their employers just feel guilty
102. 3:15paying them less?
103. 3:16No, it's because employers have to pay
104. 3:18them extra to keep good workers.
105. 3:21Kelsey started working here when she was
106. 3:22just 13.
107. 3:23For being only 13, I think I was making
108. 3:25a good amount of money.
109. 3:27So,
110. 3:28minimum wage was fine.
111. 3:30Now, Kelsey makes as much as $20 an
112. 3:32hour.
113. 3:33If you work hard, you can make more.
114. 3:35It's just
115. 3:36you have to prove yourself.
116. 3:38But, had the minimum wage been what some
117. 3:40politicians wanted,
118. 3:42increase in the minimum wage to $9.13
119. 3:45an hour.
120. 3:48Kelsey may have never had that chance.
121. 3:50Her job might have disappeared.
122. 3:52Some business at the margin says, I can
123. 3:54make money paying people $6 an hour. I
124. 3:57can't make it paying them 7.25. I won't
125. 4:00expand.
126. 4:01If the cost of expanding workers is too
127. 4:04much for you to absorb, then you
128. 4:06probably don't have the best business
129. 4:08model going.
130. 4:09Whoa, that's harsh. Then you deserve to
131. 4:11fail? How does that help workers?
132. 4:14What could be more cruel than to raise
133. 4:16your wage artificially and now you have
134. 4:18no wage?
135. 4:19Higher unemployment thanks to
136. 4:21government's good intentions.