WBAL.com

There is a is a [sic] renewed call for a higher minimum wage in Maryland.

It’s coming from Progressive Maryland which released its report on the State of Working Maryland today.

Progressive Maryland would like to see the state’s minimum wage go up to over $10 an hour.

It currently is the same as the federal minimum wage at $7.25 an hour.

I discussed a similar issue to this when some in Baltimore City wanted to force Wal-Mart to pay a so-called “Living Wage” to its employees.

A 2009 article from Reason discusses the increase in the federal minimum wage back then:

If you’re a minimum wage employee, your job will pay more, but only if it still exists. These days, most companies are scrutinizing every position on the payroll to make sure it’s worth the cost. Raise the toll, and some employees will find they are no longer valuable enough to make the cut.

Economists generally agree that increases in the minimum wage cause unemployment even when the economy is prospering—something it has not been doing for the last year and a half. David Neumark, a professor at the University of California, Irvine, estimates this rise will destroy some 300,000 jobs among teens and young adults.

Even proponents of the increase understand the tradeoff. Otherwise they would demand an even bigger hike. If you can force employers to pay higher wages without reducing employment, why set the minimum at $7.25 an hour? Why not $17.25? Why not $37.25?

In 2005, Dr. Tim Kane of the Heritage Foundation wrote a criticism of increasing the minimum wage I excerpted below:

A minimum wage operates by removing the lowest rung on the economic ladder - it doesn’t just take away current jobs, but also future job opportunities. So how many rungs will Congress knock out this time? Senator Ted Kennedy proposes raising the minimum wage by $2.10 an hour. The Republican alternative from Senator Rick Santorum calls for an increase of $1.10. So the two options on the table are a mandatory price increase of 41 percent or 21 percent. The consequences for Labor demand are predictable.

The goal of price controls like the minimum wage is essentially to repeal the law of supply and demand, but senators might as well try to repeal the law of gravity. Worse than folly, disrupting the equilibrium of Labor markets causes economic damage. Although the minimum wage will not work according to economic theory-and it has not worked in reality-what makes it especially tragic is that it hits poor Americans hardest.

A survey published in the Winter 2005 Journal of Economic Perspectives, an academic publication, reports that 71 percent of economists at America’s top universities agree with the statement “a minimum wage increases unemployment among the young and unskilled.” About one-third of the economists agree outright, and another third agree with reservations. Think about that: the consensus among top economists is that the very existence of a minimum wage harms those who, according to its supporters, need it most.

The notion that increasing the federal minimum wage will push up real wages is also fiction. Average pay in America has been increasing steadily in recent years, despite the fact that the minimum wage has not changed since 1997. Real wages rise when productivity rises. Labor productivity has gained 26 percent since 1997, and real earnings for non-supervisory workers are up 7 percent. Non-wage benefits are up as well, especially returns to risk-taking entrepreneurs. The credit for these gains goes entirely to the workforce and American business, not to micromanagement from Washington, D.C.

While a minimum wage increase alone may not necessarily keep businesses from moving into the state, it will be yet another thing to add to the long list of reasons that Maryland is seen as a bad climate for businesses to move into.