FREEPORT — Maine’s U.S. senators, Republican Susan Collins and independent Angus King, don’t want to do the harm that raising the minimum wage to $10.10 would cause, but they’re content to do the damage that would still result from the smaller increase they want.
Increases in the minimum wage are popular because the benefits are obvious and immediate, while the negatives are less obvious, diffuse and tend to accrue over time.
Furthermore, if the goal is to help those who have low-paying jobs, raising the minimum wage is a very inefficient way of going about it because it is so poorly targeted. And if the goal is to reduce unemployment, raising the minimum wage does just the opposite by pricing more people out of the labor market.
Few economists would say without qualification, as Susan Feiner does in one of her recent essays in economic populism (“Arguments against raising the minimum wage defy reality,” April 15), that “with an increase in the minimum wage, employment actually grows!”
That claim ought to come with a lot of caveats, and the best we can say is that under some circumstances job growth may occur in spite of, not because of, an increase in the minimum wage, and the growth may not necessarily be in minimum-wage jobs.
It’s fine to point out that a higher minimum wage benefits recipients and raises consumer spending, but the notion that forced increases in labor costs don’t have offsetting consequences defies common sense and decades of economic research. Even if the increases don’t cause immediate job losses, over time they are likely to result in less hiring, reduced hours and benefits, higher prices and lower business investment.
A recent Congressional Budget Office report concluded that increasing the minimum wage to $10.10 an hour would raise incomes for 16.5 million individuals, but that only 19 percent of the increase would accrue to families below the poverty level, and would result in 500,000 lost jobs.
Depriving that many individuals of all their income is a very high price to pay for raising the incomes of those who already have jobs, the majority of whom live in families with incomes already above the poverty level, and in many cases well above. Do higher-minimum-wage advocates think this is an acceptable trade-off?
Increases in the minimum wage are a giant price-fixing exercise and almost always end badly. The greatest harm they do is to exclude an increasing number of mostly young, unskilled, inexperienced workers and those without good educations from the workforce altogether. This ought to be a national scandal, but minimum-wage advocates want to ignore the subject.
Instead, they like to boast that higher wages improve the quality, productivity and loyalty of the workforce, as if employers don’t already know this. But what difference does improving the quality of the work force make if the higher wages keep young or poorly educated workers from getting a job and the experience they need to move up the job ladder?
The unemployment rate in March for individuals age 25 and over was 5.4 percent, but for those with less than a high school diploma, it was 9.6 percent. For white teenagers 16 to 19 who want to work, the rate was 18.3 percent, and for black teenagers, it was 36.1 percent.
Can anyone argue that there is no connection between these embarrassing unemployment numbers and rising minimum wages? Maybe Sens. Collins and King can explain to these unemployed individuals how raising the minimum wage even further will help them find jobs.
The idea of a guaranteed income has never caught on in this country; instead, the minimum wage, driven by the goal of a “living wage,” has become its proxy.
But if the goal is a minimum family income, advocates should say so and lobby to make it a public good, paid for by the public, instead of making a poorly targeted minimum-wage policy a burden for employers, many of whom are small and can adjust to the extra cost only with great difficulty. An expanded Earned Income Tax Credit would at least target the individuals and families who need extra help.
Good intentions don’t necessarily produce good policy; sometimes the consequences are unintended and adverse. If we were serious about increasing employment and reducing poverty, we would lower the minimum wage or eliminate it entirely and look for better ways to help those with low incomes.
— Special to the Press Herald