FOR IMMEDIATE RELEASE
LIBERTARIAN PARTY OF TENNESSEE
April 6, 2006
A bill to create a state minimum wage law is making its way through the Tennessee General Assembly. The bill designated as HB3402 in the House and SB3120 in the Senate would require employers in Tennessee to pay employees at least $6.15 per hour, which is a rate of $1.00 per hour above the existing federal minimum wage.
According to statistics from the U.S. Department of Labor, Bureau of Labor Statistics, even among the group of Americans that are paid hourly rates, only about 2.7% of hourly employees are paid at or below minimum wage. The majority of those people are generally young, part-time employees who work in food services industries where undocumented tips supplement the minimum wage.
Numerous research efforts have demonstrated that increases in minimum wages result in job losses as employers reduce the number of entry-level positions they’re willing to pay the higher rate for. Based on historical results from previous minimum wage increases, it is projected that raising the minimum wage by $1.00 per hour may result in job losses up to 6% and price increases of 3% – 6% in some industries.
“It’s easy to understand the emotional appeal of the minimum wage laws, but voting for this law just simply demonstrates a basic ignorance of the economics of the free market,” says Alicia Mattson, Chair of the Libertarian Party of Tennessee. “Most employers already pay most of their employees more than minimum wage without a law mandating that they do so. That’s because pay rates represent the relative value of the job the employee performs. If you raise the minimum wage, the whole scale of relative values shifts upward, and there’s no real improvement for people at the bottom of the scale.”
Mattson continues, “If we could make people wealthy just by passing a law to demand it, why not set the minimum wage at $50 per hour so we could all have nice houses and nice cars? It wouldn’t work any better than this bill will. And trying to get there incrementally will just mean that Tennessee will lose jobs to surrounding states with lower wage scales, employers will raise their prices or cut hours or cut jobs, and we’ll end up hurting the very people the law was intended to help.”
Mattson also points out, “And besides the fact that minimum wage laws don’t work, it’s silly for us to claim that we live in a free country when the government intervenes in voluntary private transactions like employers and employees negotiating employment contracts. If the government tells you what options you must choose, then you are not free.”
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