Raising minimum wage won’t help

One of the great talking points for liberals is raising the minimum wage. Hillary Clinton, Bernie Sanders and others strongly support raising the minimum wage. Unfortunately, all they are really doing is exposing their economic ignorance.

The minimum wage is another of President Franklin Roosevelt’s “gifts” to society that has caused more problems than solutions. It was passed in 1938 at the end of the Great Depression to prevent exploitation of workers by employers. The same law required overtime pay for a work week over 40 hours and provided other workers’ rights that have since been covered by other legislation.

The first minimum wage was 25 cents per hour. If that figure is adjusted for inflation up to today, the minimum wage should be $4.07 per hour. That is a far cry from the $15 per hour now touted as necessary.

Supporters of the wage increase say that there would be no or minimal detrimental effect on employers. They maintain there would be only a minimal increase in costs that consumers will gladly pay. Seattle would show differently.

Seattle is one of those liberal bastions that seems to pride itself on being ahead of the rest of society. The city government instituted an increase to $15 per hour to service industry employees starting in 2015 and phased to 2020.

The results? Almost immediately, two popular sit-down restaurants closed. January to June job losses for Seattle restaurants were 1,300 jobs. Northwest Caster and Equipment moved its business to nearby Lynnwood. According to interviews on local TV station KUOW, numerous small business owners shelved expansion plans. Oh, and (gasp) local Starbucks stores raised their prices by 15 percent.

That illustrates the effect on employers and eventually to employees. On a more personal level, some interviewed hotel employees were not happy with the change either. One woman stated that she makes less now than she did at $7 per hour. She no longer has a 401k, health insurance or paid vacation. Furthermore, she said the hotel used to feed her for free. Now she has to bring her own food, pay to park and has no overtime or extra hours.

There are several problems with a proposed national minimum wage increase. First, $15 per hour in New York City is not the same as $15 in Austin, Texas, or in Keokuk, Iowa. Minimum-wage standards should be set by the states, not at the federal level. Nowhere in the Constitution is there a mandate for any wage level, unless you are looking at the liberal socialist revised version. Of course, that one doesn’t exist because even liberals are smart enough to know reducing their beliefs to paper would cause a revolt.

Second, the minimum wage increases are not across the board, at least not yet. Why is only one industry sector singled out? That is easy. If union pressure can get an increase for service workers, union membership would theoretically increase.

Third, the hidden factor is that if the minimum wage increases, the entire wage scale would need to change. Many union contracts are factored in part on minimum-wage levels and inflation rate. That aside, what experienced solid employee is going to accept the untrained newcomer making nearly the same as they do? Disgruntled employees don’t make for a good working environment.

Fourth, when faced with rising costs, business owners have two choices. They can increase prices or cut expenses. For most businesses, labor is the largest cost. Many times raising prices, especially in this really sad Obama recovery, is not possible. That means costs must be cut, usually through scaling back employee benefits or eliminating jobs through automation. Increasing the minimum wage traps low wage earners, usually the most needy of society, into their present status as jobs disappear, or other considerations go away. Witness the Seattle hotel employee. She lost several job benefits, many of which were probably not reported as taxable income. Now she has a higher wage, hence higher taxes. And, as much as I hate to say it, she probably now does not qualify for many government help programs due to increased income.

Finally, raising the minimum wage virtually eliminates the chance for teenagers to join the workforce at an early age. Strapped employers will choose a more experienced employee with a proven work ethic over an untried teenager. That will have long-term consequences.

So when liberals say raising the minimum wage will have no economic effect, just point them to their favorite liberal experiment, Seattle.

Tom Riggins is an LVN columnist and may be reached at news@lahontanvalleynews.com.


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