THE ISSUE: Minimum wage increase

OUR OPINION: As much as workers need the money, wage hike may cost jobs

About 1,200 applications for a 13-week extension to unemployment benefits have been filed with the Pendleton Street office of the state Employment Security Commission in less than two weeks, the area director tells The Greenville News.

Its the latest sign that times are tough in the Palmetto State. And while there will be a measure of celebration for many today when the federal minimum wage increases, there is evidence that some will have more money but others may in fact find themselves out of work.

The Employment Policies Institute this week released new preliminary data showing the relationship between minimum wage increases and unemployment. The study, which is being published this fall and is authored by professors Joseph Sabia of the University of Georgia and Richard Burkhauser of Cornell University, analyzed the effects of the 2005-06 increase in New York states minimum wage and found that the employment decline among vulnerable groups such as teenagers and adults without a high school diploma was substantial.

The study found that for every 10 percent increase in the minimum wage, employment among 16- to 29-year-olds without a high-school degree decreased between 6 and 14 percent.

This study buttresses scores of other recent research papers. A study from the University of California at Irvine found that for every 10 percent increase in the minimum wage, employment for high-school dropouts and young black adults and teenagers falls by 8.5 percent.

Research from Duke University found that minimum wage increases cause low-skilled employees to lose their jobs to more skilled applicants often second and third earners from wealthier families who wouldnt have taken a job paying the previous wage.

For a business with 20 entry-level employees, Thursdays 70-cent wage hike will increase labor costs by approximately $30,000 in the next year. Businesses with small profit margins would need to sell hundreds of thousands of dollars in additional goods or services to recoup those increased costs, a tough task in the present econony.

Decades of economic research clearly demonstrate that minimum wage hikes result in job loss for the most vulnerable members of the economy, said Rick Berman, executive director of the Employment Policies Institute. The unintended consequences of Thursdays hike is pricing low-skilled working men and women in South Carolina out of the job market and increasing unemployment among those groups that need help the most.

When you put increased labor costs on autopilot, while consumer demand is shrinking and commodity costs are rising, you create a recipe for job loss among the least employable workers.

As much as those at the bottom of the wage scale need the extra money from the wage increase, it is tragic that the action may cost some their jobs under present circumstances.

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