Wage Hike Won’t Work for Poor

Original Article:

  • Author: Craig Garthwaite

  • Publication Date: April 2005

  • Newspaper: Boston Herald

  • Topics: Minimum Wage

Gov. Mitt Romney seems an unlikely candidate for Ted Kennedy’s pinch hitter. Since the senator’s efforts to raise the national minimum wage struck out in Congress, though, Romney has stepped into the batter’s box to endorse proposals that would increase Massachusetts’ minimum wage to more than 60 percent above the current federal rate with annual adjustments for inflation.

Although the governor has claimed that a higher minimum wage will help us to retain jobs, many people could soon find that his optimism threatens their livelihoods.

Attempts to raise the minimum wage rely more on emotion than economic reality. To engender sympathy for their cause, wage hike proponents on Beacon Hill often portray the typical minimum wage earner as a single parent struggling to put food on the table.

But just 10 percent of Massachusetts residents earning $7 an hour or less are sole earners supporting children. Because most are members of multiple-earner families, their average family income is nearly $60,000.

As Brandeis University professor and former Clinton Labor Secretary Robert Reich observed, most minimum wage earners aren’t poor.

Nor are they trapped in a permanent limbo of low-wage employment. Once they become established in the job market, low-wage employees receive raises at a rate almost six times larger than everyone else. They’re moving up the pay scale due to hard work, not because of a government mandate.

The small group of people who remain at the minimum wage for extended periods tends to be the least skilled members of the work force (often high school dropouts or immigrants with very poor reading skills). But instead of putting more money into their pockets, a minimum wage hike could cost them their jobs. Duke University researchers have found that after an increase in the minimum wage, the least-skilled employees are crowded out of their jobs as better-educated teenagers are drawn into the work force.

Minority employment also suffers after a minimum wage increase, largely due to disparities in education and skill levels. Researchers from Cornell University have found that young African-Americans, for example, face four times the job loss of non-blacks following a wage hike.

People without a job miss more than just a paycheck. For many Americans, working is their only chance to learn job skills.

Romney ought to recall the words of 1972 Democratic presidential candidate George McGovern. Discussing the consequences of minimum wage hikes, McGovern asked, when entry level jobs disappear, where will young people and those with minimal skills get a start in learning the invisible curriculum we all learn on the job?

Without the opportunity to learn the lessons of the workplace, many low-skilled adults and minorities will find it impossible to move up in the world. The prospect of extended joblessness is especially troubling in a post-welfare reform era. For most people, a steady paycheck is the best safety net they have.

Low-income employees won’t benefit from a minimum wage increase if they’re no longer working. Romney should be forging policies to help the needy without costing them their jobs.