Minimum wage increase challenged
Author: Craig Garthwaite
Publication Date: April 2005
Newspaper: Foster's Daily Democrat
Topics: Minimum Wage
“But everyone else is doing it…”
If you’ve got teenagers, you may have heard those words used to rationalize everything from raves to body piercings. Even as adults, many find it impossible to resist the siren call of peer pressure. Lawmakers in Concord, for example, are pushing to increase New Hampshire’s minimum wage by nearly 30 percent to bring the state into line with the rest of New England. Just as we counsel our children to do what’s right instead of what’s popular, though, we should remind our lawmakers that raising the minimum wage imperils the livelihood of the state’s low-skilled workforce.
Wage hike proponents frequently suggest that the state must step in to demand the raises that businesses resist. While most minimum wage earners quickly advance into better-paid positions, a small group in New Hampshire’s workforce may remain at the minimum wage for extended periods. These employees are very often high school dropouts or have poor reading skills. They earn the minimum wage because they offer meager skills, not because their employers are unreasonable. A wage hike might not be so problematic if lawmakers could also confer new skills along with the increased wages. Voting for higher wage floors, however, doesn’t teach anyone to read, make change or show up to work on time.
Employers buy labor. When faced with mandatory wage hikes, they can either pay higher wages for the same skills, or they can do like the rest of us and try to get more for their money. That means finding workers who offer the skills to justify the new wages. Many employers will hire tech-savvy teenagers to replace the older, unskilled workers unable to use the emerging technologies now common even in the low-skilled job sector. These teenagers flood into the marketplace to earn spending money, not to support themselves.
Other employers bypass hiring these better-educated teenagers and simply eliminate entry-level jobs. Consider the proliferation of ATMs and self-checkout lanes at grocery stores. McDonald’s, one of the most reliable sources of job opportunities for young people, is already experimenting with fully automated self-serve kiosks instead of cashiers.
The adults who lose their jobs miss out on more than just a paycheck. For many Americans, the opportunity to work is their only chance to learn better skills and move up in the world.
New Hampshire’s lawmakers ought to remember the words of former Senator and 1972 Democratic presidential candidate, George McGovern. Discussing the effects of minimum wage hikes, the famously liberal 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?”
The value of that invisible curriculum is incalculable. Almost two-thirds of people entering the job market at the minimum wage get a raise within one to 12 months. After improving their skills and establishing their value, these employees receive raises at a rate nearly six times larger than everyone else. They’re moving up the pay scale due to hard work and commitment, not because of a government mandate.
Without an opportunity to learn the lessons of the workplace, though, many low-skilled adults will be locked in poverty. 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.
Wage hike proponents in the Statehouse consistently ignore the reality of today’s low-wage workforce, preferring for political expediency to present struggling adults as the rule instead of the exception. In New Hampshire, however, employees earning $7 an hour or less have an average family income of nearly $60,000. Even former Clinton Labor Secretary Robert Reich observed that “most minimum wage earners aren’t poor.”
If that seems implausible, consider that over 90 percent of these employees live with their working parents or other relatives, live alone, have no children, or have a working spouse. Just 9 percent are sole earners with children — all eligible for up to $4,300 in supplemental benefits from the federal Earned Income Tax Credit.
New Hampshire has a long tradition of marching to its own drummer. With so much at stake for the most vulnerable members of the state’s workforce, now isn’t the time for New Hampshire to start running with the herd.