New Hampshire officials may be thinking of young job seekers. Unemployment in the state averaged 18 percent for 16- to 19-year-olds in 2010. Horrible enough, though well below the national average of 25.9 percent, according to the Bureau of Labor Statistics. And the minimum wage affects youths disproportionately: About half of those paid the federal minimum or less are younger than 25.
Do penny differences really count when it comes to employment? The case that they do is stronger than it used to be, especially when it comes to less-productive workers such as teens. Particularly problematic for teens is the federal minimum wage, an old fixture of the American workplace.
In 1938, President Franklin D. Roosevelt signed the Fair Labor Standards Act, which placed direct upward pressure on wages. The act set the modern national minimum wage at 25 cents an hour and established a maximum workweek of 44 hours.
One idea driving FDR was that when workers put in fewer hours - or are less productive, or use older machinery - that's a bonus, since more workers are necessary to do a job. At the time, Roosevelt explicitly blew off suggestions that marginal costs hurt the economy. In a fireside chat, he told Americans not to let "any calamity-howling executive with an income of $1,000 a day" tell them "that a wage of $11 a week is going to have a disastrous effect on all American industry."
Not everyone concurred with his assessment. Southern companies were especially concerned, because their wages were further below the new legal level than were wages at Northern companies. Benjamin Anderson, a Chase Bank economist, said the act devastated Puerto Rico, where employers couldn't afford the new rate.
