The True Cost Of Minimum Wage ; The Minimum Wage Is One Of The Best Ways To Put Low-Skilled Workers Out Of A Job.

<p lede="true">BY ELIZABETH STELLE and JOHN R. BOUDER

Have trouble getting to Walmart on Black Friday? You may have encountered chanting protesters seeking minimum wage hikes.

Across the country, momentum is building for a minimum wage of $10 to $15 per hour to help low-skilled workers at big-box stores and fast-food chains.

But if a higher minimum wage is so critical, why not push it to $20 or $50? Because experience shows minimum-wage increases hurt the very workers they aim to help.

Joe Olivo can attest to the numbers. As a second-generation owner of a small printing business in New Jersey, he employs workers who start at minimum wage. New Jersey voters recently approved a one dollar increase in the minimum wage that goes into effect on Jan. 1, raising it to $8.25 per hour.

In a phone interview with Commonwealth Foundation, Olivo says many people don't understand the cumulative effect each small increase has on economic growth and the unemployment rate.

Olivo's even had to lay off employees because of increasing labor costs.

"It's not just those people getting minimum wage that get a raise." Olivo says, "It affects my whole wage bracket."

The sad truth is, the minimum wage is one of the best ways to put low-skilled workers out of a job.

Today, minimum-wage workers are mostly teens and, not surprisingly, the jobless rate for 16- to 19-year-olds has steadily increased as the minimum wage has risen. Further increases will only continue that trend.

Even more concerning is the impact on young minorities.

In states like Pennsylvania, which has seen several minimum-wage increases from 2007 to 2009, more black young adults lost their jobs as a direct result of minimum-wage increases than the recession.

The result? According to the Bureau of Labor Statistics, black youth unemployment sits at an astonishing 36 percent nationwide.

Raising the minimum wage will price more young people out of entry level jobs from which they could rise - effectively sawing off the first rung of the ladder to their prosperity.

As an anti-poverty program, the minimum wage again fails miserably, because few breadwinners actually earn it. Only 10.5 percent of an increased minimum wage goes to poor working families.

In fact, fewer workers overall are making minimum wage. In 1979, eight percent of workers made the minimum wage, and by 2011 it had fallen to just three percent.

The minimum wage feeds the cycle of poverty by forcing more low- skilled workers out of jobs.

Reducing the cost of hiring through tax breaks and health care reform that truly lowers costs are better approaches to combating the major cause of poverty: unemployment.

Olivo's small business serves as a good example.

Asked if protesters got the $15 an hour they were demanding, he responded, "I can't even imagine. I couldn't make that up in raising prices. It would lead to layoffs and me looking at using more automation. At least I can control that cost."

Why layoffs? Businesses don't turn a profit every year. Mandated cost increases force them to find places to cut expenses or raise prices for consumers.

So who does gain from raising the minimum wage? Politicians, as well as labor unions, like the Service Employees International Union.

Minimum-wage increases tip the balance in favor of higher skilled and higher wage unionized workers by raising the floor from which they negotiate compensation.

Politicians, on the other hand, can act like they did something for the little guy while receiving union support, which is no small matter. In 2012 alone, government union SEIU Local 668 spent more than $200,000 of its members' dues on political activity and lobbying.

For Joe Olivo and entrepreneurs everywhere, a higher minimum wage is one more government obstacle to growing their businesses and creating jobs.

"It's not just the increase in minimum wage, but health care costs are going up, taxes are going up. ... It's just one more thing that makes it harder to do business."

Walmart protests may put a damper on your shopping this Christmas season, but they won't result in better lives for workers, even if activists do succeed in raising the minimum wage.

(Editors' note: The writers are policy analysts at the Commonwealth Foundation, a Harrisburg-based free-market think tank.)