This week, several of Madison’s most notable politicos called for a referendum to increase Madison’s minimum wage from the federal minimum of $5.15 an hour to an astounding $7.75 an hour.

Any student who has ever had a part-time job around campus — other than the few of you overpaid people who work for an ASM-funded organization — knows that $7.75 an hour is a very good wage. It shouldn’t take an economics grad to understand that such an increase in the minimum wage would have detrimental effects on students.

Downtown Madison is known for its diverse group of small businesses, from restaurants to bars to specialty shops. These businesses pay a great deal for rent on State Street and Capitol Square, making it difficult to break even, let alone turn a profit.

A 50 percent increase in the minimum wage will cause many campus businesses to rethink their business plan, cut the number of employees that work at one time and possibly reduce the number of hours they are open for business, which will mean even fewer people will be needed to cover the shorter work hours and an increase in prices.

While some people, including students, will see a nice increase in their paychecks, many students will find that it will be even more difficult to find a job near campus. And shopping at your favorite stores will be more expensive when businesses are forced to raise prices. It will also be more difficult for students to shop, either because they don’t have money to spend because they cannot find a job or because stores have reduced their hours and are not open at times between students’ classes and jobs.

It is true that $5.15/hour is not substantial. The minimum wage is low, but most of the people at the minimum wage are unskilled entry-level workers looking to gain experience in the job market. Except for a few exceptions, most students make more than the minimum wage, but this will still affect student workers because there is nothing modest about this proposed increase.

For some businesses, cutting back jobs and hours will not even be an option. The only option for these businesses will be closing their doors because their margins are so thin that this increased expense will force them under.

A business paying its employees $6.25 an hour now ($1.10 over the minimum wage), needing to cover only 10 hours a day and having only two employees work at a time, open 360 days a year, will see their costs increase by over $10,000 annually.

This is a low estimate for most businesses that have more than two employees. An increased minimum wage will have the opposite of its intended effect. Indeed, the very people this extraordinary increase is supposed to help are the same people it will be of the greatest detriment to.

Proponents of this massive minimum-wage increase may disagree with this, but where will the money to pay for these increased wages come from? An increase in wages will not increase an employee’s productivity, and sales are not dependent on minimum-wage earners, so a sharp increase in sales revenue is unlikely, particularly if prices for goods and services increase.

Indeed, in a downtown such as Madison, which is dominated by small businesses, the effects of this increase will be more detrimental than in other cities where the downtown is not so small-business oriented.

What might be the most intriguing part of this half-baked plan is that the proposed referendum would go on the February ballot. This is when Wisconsin has its presidential primary, and Republicans are unlikely to turn out in large numbers since President Bush is not expected to have a major challenge, if any.

However, a relatively high turnout can be expected from Democrats, as the team of 10 Democratic candidates will likely still be impressing only a handful of people as they battle it out to see who will be the unfortunate one that will get to face a strong President Bush in the general election. Even this strategy will likely fail, because it is likely that even most Democrats are against an increase in the unemployment rate.

If the Madison politicos proposing this plan are genuinely concerned about their constituents, they should not be supporting a plan that will put a portion of Madison’s lowest 10 percent of income-earners out of jobs. Instead, they should start focusing on working as a state to improve job prospects and opportunities for all Wisconsinites.

Matt Modell ([email protected]) is a senior majoring in journalism and political science.