A low-wage job is better than no job

Posted on June 10, 2009

State legislators should beware that putting minimum-wage hikes on auto-pilot is a very misguided policy that will yield disastrous results for vulnerable workers in Rhode Island (“R.I. Senate ties wage hike to consumer price index,” May 28).

Decades of economic research demonstrate that there is an increase in job losses following minimum-wage hikes, particularly among vulnerable groups such as minority teens and adults without a high-school diploma. Legislation that would make minimum-wage increases automatic merely shifts these negative effects from a once-in-a-while occurrence to an annual event.

While a 25-cent increase may not seem like a lot, a business owner with 20 entry-level employees would have to absorb over $10,000 in new labor costs each year. Small businesses faced with decreasing demand would be forced to cut employee hours and eliminate some jobs entirely in order to stomach an automatic-wage hike that would take place regardless of the economic climate.

The unintended consequence of reckless, auto-pilot minimum-wage hikes is job loss for the least skilled workers at a time when they need help the most. A job at the previous minimum wage is much better than no job at a higher rate of pay.

KRISTEN LOPEZ EASTLICK
Washington
The writer is senior economic analyst for the Employment Policies Institute.