Economists have repeatedly explained the flaws of the minimum wage. It impedes the hiring of low-wage workers. It forces employers to boost cash wages, even when workers would prefer health insurance or on-the-job training. Its costs largely fall on consumers of goods made with low-wage labor. It’s not targeted to low-income households. Its purpose can be better achieved through the earned-income tax credit.
 

Resident Scholar Alan D. Viard

So, it’s disappointing to see the new Congress poised to hike the minimum wage. For Republicans, though, this is the wrong fight at the wrong time. The harmful impact of the federal minimum wage is limited--it affects only a small part of the labor force and many states have already set higher minimums. And, despite its flaws, it does help some workers. All told, this would be an odd place for Republicans to draw a line in the sand, particularly after yielding on such important matters as the prescription drug benefit and the run-up in discretionary spending. Rather than bucking strong public opinion on this issue, Republicans should keep their powder dry for the bigger battles ahead.

Alan D. Viard is a resident scholar at AEI.