It’s common knowledge among students in today’s dim job environment that perhaps graduation isn’t exactly a light at the end of the tunnel. For this reason, many students have opted to stay in school and work part-time until the economy resettles.But, unfortunately, many students may not have to wait until after graduation before finding themselves unemployed.On July 24, the federal minimum wage was raised for the third consecutive year from $6.55 to $7.25.Many students currently earning minimum wage welcomed the boost. But some experts fear the raise might only exacerbate the country’s spiraling unemployment.Economists estimate 300,000 out of the nearly 2.8 million workers earning minimum wage will lose their jobs due to the hike, according to the New York Times.Currently the official unemployment rate stands at 9.5 percent, according to the U.S. Department of Labor. However, most economists argue actual unemployment lies between 15 and 20 percent.Furthermore, the present teenager unemployment rate is 24 percent. And unemployment among African-American teenagers has spiraled above 40 percent, its worst levels since 1965.Labor statistics indicate 53 percent of minimum age earners are between the ages of 16 and 24. With the minimum wage rate on the rise yet again, forecasters warn it is very likely young Americans, specifically college students, will be forced to incur more debt by taking on additional student loans.It isn’t exactly breaking news that today’s economy is, to put it mildly, unstable. But as long as we rely on the same feeble-minded thinkers who overlooked this crisis, things aren’t likely to perk up anytime soon.In his 1946 magnum opus, “Economics in One Lesson,” libertarian economist and former New York Times columnist Henry Hazlitt gives perhaps the most succinct diagnosis for the innumerate fallacies that have infected economics for generations.”The Art of Economics,” Hazlitt writes, “consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”This lesson has specific implications on minimum wage laws, which, when we trace the effects throughout the entire economy, inevitably serve to increase unemployment and constrain overall economic productivity.Many of our problems, Hazlitt claims, stem from our myopic perspective of macroeconomics.As Hazlitt wisely explains, a worker’s wage merely reflects the price of his service. Consequently, a higher wage rate also represents an increased cost for producers, so the burden of paying higher wages is merely transferred to consumers when wages are artificially increased.Many times, however, higher prices might not be possible because they may force consumers to shift their spending to other industries or simply buy less, thereby reducing the demand for skilled workers.The end result, therefore, is higher unemployment, as some will benefit but many others will be thrown out of work altogether.In addition, minimum wage laws kill jobs by eliminating competition.Contrary to common misperception that government legislation helps the “little guy,” minimum wage legislation will actually drive the small, marginal producers out of business to the benefit of large corporations.Over time, such legislation simply benefits the large companies by consolidating their monopolistic power and constructing higher barriers of entry for potential entrepreneurs.Hazlitt also shows how welfare programs designed to take care of the increased unemployment will potentially present a problem.For example, if we forbid people to work for $7 an hour and instead pay them to produce nothing for, say, $5 hourly, we create a situation where everyone is merely working for the difference between his wages and the amount of relief.As a result, production decreases, purchasing power diminishes, and real wealth across the entire economy declines precipitously.Politicians might claim this kind of legislation is aimed at protecting workers. But, in reality, it only creates a vicious circle of economic malaise, as increased minimum wage leads to increased unemployment, increased dependence on public welfare services, higher inflation, reduced purchasing power and, finally, a stagnate and under-productive economy.Evidently, it takes an Ivy League scholar or a Nobel Prize-winning economist to overlook the fact a society cannot magically distribute more wealth than it has first created and produced.Real wages come out of individual production, not government decrees or fiat.Ultimately, the more technological advance and productivity there is, the more a workers services are worth to consumers, hence to employers, so the more they will get compensated.That’s precisely why financial policy should be directed, not to imposing more burdensome requirements on employers, but to advancing policies that encourage profits and capital investment that increase the overall productivity of workers.If not, students can get ready to take out additional federal loans, because the job market will be down for a long, long time.Scott Burns is a 20-year-old history and business junior from Baton Rouge.
 
—–Contact Scott Burns at [email protected]