Preston Cooper for e21: On New Year’s Day, some 21 states across America increased their minimum wages, bringing the total number of states with minimum wages above the federal level to 29. While proponents of government wage-setting celebrated the increases, young people have reason to worry. Low-paying jobs can provide invaluable workplace experience to teenagers just starting their careers. Higher minimum wages limit the availability of these entry-level jobs, as employers are forced to hire fewer people for higher wages.
A little-known federal law designed to mitigate these negative effects is the youth minimum wage. The law allows employers to pay a subminimum wage of $4.25 an hour (59 percent of the regular federal minimum of $7.25 an hour) to workers under 20, for a period of up to 90 days. While this exception is a small one, it does provide a window of opportunity for young people who want to work but can’t find jobs that match their skill sets and also pay the minimum wage or above.
Unfortunately, the real-world applicability of this law is complicated by state minimum wage laws. Many states are not waiting for Congress to raise the federal minimum wage — as we saw on New Year’s Day, a large number are plowing ahead with their own state-level increases. Several states, however, have neglected to include an exemption for young workers, rendering the federal youth minimum wage obsolete.
TRADE POLICY ISN’T WORKING
Robert Scott for the Economic Policy Institute: The United States failed to achieve a doubling of exports between 2009 and 2014, as promised in President Obama’s National Export Initiative (NEI). It wasn’t even close. Total U.S. goods and services exports increased by less than 50 percent ($766 billion, or 48.4 percent) between 2009 and 2014 (estimated). Meanwhile, imports increased by an even larger $883.8 billion, and as a result, the U.S. trade deficit increased by $117.0 billion.
Expanding exports alone is not enough to ensure that trade adds jobs to the economy. Increases in U.S. exports tend to create jobs in the United States, but increases in imports lead to job loss — by destroying existing jobs and preventing new job creation — as imports displace goods that otherwise would have been made in the United States by domestic workers. Between 2009 and 2014 the growth in imports more than offset the increase in exports, resulting in a growing trade deficit. … Growing trade deficits have eliminated millions of jobs in the United States, and put downward pressure on employment in manufacturing, which competes directly with most imported products. …
The most important reason behind the failure to double U.S. exports over the past five years has been our inability or unwillingness to address currency manipulation. Ending currency manipulation would have reduced the U.S. trade deficit by between $200 and $500 billion. It would have slowed the growth of imports and increased goods exports alone by more than $1 trillion, enough to achieve a real doubling of exports. Better yet, it would have created between 2.3 and 5.8 million net new jobs, increased GDP by between $288 and $720 billion (2.0 to 4.9 percent) and reduced the budget deficit, at no cost to the government.
PROPERTY RIGHTS CAN SAVE FISHERIES
Jonathan Adler and Nathaniel Stewart for the Cato Institute’s Regulation magazine: In a crowded meeting hall in Portsmouth, N.H., the New England Fishery Management Council voted in January 2013 to recommend drastic new cuts to the catch limits for Atlantic codfish off the New England coast. Over the strenuous objections of local communities and fishermen, the council proposed 77 percent reductions in the allowable harvest for each of the next three years in the Gulf of Maine and a 61 percent cut in next year’s catch on Georges Bank. …
New England fishermen and other opponents of the plan fear that the restrictions will doom the centuries-old local fishing industry. Plan proponents, however, counter that the measures are the only way to save the rapidly collapsing Atlantic cod industry. Unfortunately, even these severe new limits may be too little, too late. The latest measures follow years of mismanagement, overly optimistic stock estimates, and misguided fishery policies that failed to align the economic interests of the fishing community with the long-term sustainability of the fishery. …
It would be easy to attack New England fishermen for being short-sighted. To do so, however, would ignore the incentives they face — incentives created by the existing regulatory structure. Incumbent fishermen have little incentive to agree to catch reductions because they would be unlikely to capture the full value of the rebuilt stocks. A rebuilt stock would encourage inactive trawlers to resume fishing and active trawlers to increase their fishing intensity.
Proper fishery management can both conserve fisheries and maintain their value. One approach long recommended by economists has been the use of property rights in fisheries through territorial or catch-share allocation among fishery participants. The ability of such methods to enhance economic efficiency is no longer a matter of academic speculation or economic theory. There is ample empirical evidence that such institutional reforms encourage more efficient fishery exploitation, reduce overcapitalization, and eliminate the dreaded “race to fish” — the wasteful and dangerous effort to catch as many fish as possible in a very short fishing season.
Compiled by Joseph Lawler from think tank reports.
