Minimum wage hikes kill jobs: just ask Samoans and Aussies

Albuquerque voters will be asked to vote — possibly in November — on whether to raise the minimum wage from the statewide $7.50 to $8.50 with future increases indexed to inflation. Interestingly the issue of minimum wages has caused a great deal of economic turmoil in the US protectorate Samoa. According to minimum wage expert Michael Saltsman:

In 2007, Congress passed legislation to increase the federal minimum wage by approximately 40 percent in three steps, from $5.15 to $7.25. American Samoa, a U.S. territory in the Pacific, also was required to increase its minimum wage to $7.25 per hour, raising the rate by 50 cents every year. The territory previously set separate minimum wages for different industries, ranging from $2.68 to $4.09 per hour.

Flash forward five years: The territory’s unemployment rate now stands at nearly 30 percent. The economy relies primarily on exports of canned tuna, and one of the island’s two canneries shut down in 2009, citing increases in the minimum wage as a significant factor in the plant’s closure. Other island employers have reported to the Government Accountability Office that they plan to leave American Samoa, again naming the minimum-wage increases as the culprit.

There’s a nice, short video on the issue from “60 Minutes” here.

As if to reinforce the point that minimum wage laws kill jobs, Australia’s recently-increased minimum wage has increased unemployment among that nation’s youth (despite Australia’s strong economy overall).