A Rising Tide - Editorial
Saturday, January 04, 2014 11:05 AM
Some workers in Ohio received an automatic pay raise on Wednesday when the minimum wage increased by ten cents to $7.95 per hour. Those workers might be feeling like they are getting the short end of the stick when they realize the same level in Connecticut, New York, and Rhode Island saw their lowest wage earners receive increases from 25 to 75 cents per hour. New Jersey jumped their minimum wage by $1.
But no one can touch SeaTac, Washington. On January 1, hotel and transportation workers in this town saw their minimum wage go from $9.32 per hour to $15 - an increase of nearly 61 percent.
One might think these workers would be dancing in the street after receiving these pay hikes. But a funny thing happened to seeing these great big new checks.
To afford the new wages, employers are cutting hours, cutting benefits, or eliminating jobs altogether. One local restaurant owner reported that not only would he not be opening a fourth eatery as had been announced earlier in 2013, he was going to close the doors on one. A hotel financier said they are now stopping plans to build a new hotel in SeaTac. Other business owners have announced they will outsource functions to businesses who are outside the city limits and not liable under the new wage law.
Raising the minimum wage has proved to reduce employment most of the time. In April of 2013, Forbes Magazine published the findings from a 20-year study performed by economists from UC-Irvine and the Federal Reserve Board. They said 85 percent of the time, jobs were lost following a minimum wage increase. They also pointed out that increasing the lowest wage pay also caused an increase in the number of people at or near the poverty line as hours and jobs were slashed.
According to the Bureau of Labor Statistics, about two percent of American workers earn the minimum wage. Of that, only three-tenths of one percent are both below the poverty line and earn the minimum wage. This means that most minimum wage earners are young, inexperienced, or in their first job. This is supported by the fact that 50 percent of these workers are between the age of 16-24 years of age and half of them earn a raise in their first twelve months of employment.
So what appears to be the result of minimum wage hikes - especially large jumps like the one in SeaTac? Fewer jobs for a segment of the population who needs more opportunities, not an artificial wage floor.
Now some members of the U.S. Congress and the Obama administration are making noise about raising the federal minimum wage from $7.25 per hour to $10.10 by 2016. Added to the already sky high uncertainty over the effects of Obamacare on businesses - and its benefits of turning more workers into part-time employees - this proposal could extend the current U.S. economic condition for years and continue the “jobless recovery” the Obama administration has been bemoaning.
We urge Washington D.C. to reject the minimum wage increase. Instead of passing legislation that discourages investment and jobs, encourage a business environment that fosters an increase in better paying jobs - not artificially - but in a free job market where these workers can increase their wages through opportunity and experience. Only then will the economy grow at a sustainable rate.