Media Mania over Wage Increase Ignores Economists' Dissent

You'd think it was the news media that "got a raise" last week for all the cheering. The federal minimum wage was increased on July 24 by 70 cents to $5.85 an hour and will go up by the same amount in 2008 and 2009.

CNN's Ali Velshi gleefully greeted the change on "American Morning" July 24. He called it "unmitigated good news."

ABC's Claire Shipman also called it "good news for thousands of low-paid workers," on "Good Morning America" the same day.

Media merriment over the 13.5 percent increase was to be expected since CNN, PBS, ABC, USA Today and The Washington Post all showed support for an increase when it was on the Democrats “100 hour” agenda.

While some politicians and members of the media have said this is good news for America, most economists say just the opposite. Their arguments that the increase will hurt businesses and the economy and  slow job creation were left out of many reports.

CNN's Lou Dobbs even got confused about how much he makes on July 24.

The increase turns out to be “just about a 10 percent raise for those folks on minimum wage, about two million of us,” said Dobbs in his commentary during “The Early Show” on CBS.

Since when is Dobbs a minimum wage earner? According to, he makes millions each year from his anchor job at CNN. And that's not even including his book, "The War on the Middle Class" and his financial newsletter.Dobbs was also wrong about the number of people making the minimum wage. 2005 data from the Bureau of Labor Statistics put the number of minimum wage earners at 479,000 hourly workers "earning exactly $5.15.""Lou Dobbs Tonight" reporter and "Your $$$$$" co-host Christine Romans was "sorry" for minimum wage workers on July 28.

“[W]e found out if you’re earning the federal minimum wage and you’re working full-time in this country, we’re still sorry,” said Romans on CNN’s “Your $$$$$ [Money].”

Many reports completely left out the dissenting opinion from many economists -- that increasing the minimum wage will actually harm the economy and low-skilled workers particularly.In fact, a survey of the American Economic Association found that “over 73 percent of AEA labor economists believe that a significant increase [in the minimum wage] will lead to employment losses and 68 percent think these employment losses fall disproportionately on the least skilled.”

Dr. Gary Wolfram, a Hillsdale College professor and adviser to the Business & Media Institute, explained that minimum wage hikes “[raise] the cost of doing stuff where low-skilled labor is involved and increased the price of things that would require low-skilled labor – hotels, fast food.”

Walter Williams, an economist and BMI adviser, has written: “if higher minimum wages could cure poverty, we could easily end worldwide poverty simply by telling poor nations to legislate higher minimum wages.” 


Julia A. Seymour
Julia A. Seymour
Julia A. Seymour is the Assistant Managing Editor for the MRC's Business and Media Institute.