Wednesday, January 31, 2007
An upside to a federal minimum wage boost
From the RoundTable blog
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Al Nelson
Nelson, of Hardy, is a retired businessman and former telephone company economic analyst.
The Jan. 16 Roanoke Times featured a commentary on the federal minimum wage by Andrew Cassel and recently published in the Philadelphia Inquirer. That commentary, although well written, concludes that boosting the earned-income tax credit is preferable to raising the minimum wage.
I can only wonder in astonishment if Cassel ever reflects seriously on the implication of his conclusions when he writes such illogical nonsense.
The earned-income tax credit is not in fact, a tax credit. It is a gift of public funds to those who do not have for one or another reason, or perhaps have not bothered, to acquire the skills and education to provide for themselves an adequate living from their endeavors. That unearned tax credit is not related to the minimum wage issue economically. It is just an act of public charity, the overall cost of which to the public treasury may be reduced if the federal minimum wage is raised.
Theoretically speaking, a minimum wage protects employees from predatory employers. At what level that minimum wage is set is purely a socio-political compromise having nothing whatsoever to do with the economics of employment. I will personally be glad to debate that statement with anyone, at any time, having myself been an employer for almost 20 years.
Cassel speculates in his commentary that small business owners may face difficult and perhaps draconian choices if the minimum wage is raised. In that same article, he refers to studies of state minimum wage rates that prove otherwise as anecdotal. Anecdotal perhaps, but sufficient enough to find " ... there was no measurable drop in employment or economic growth" associated with an increase in the minimum wage within a given state.
If the federal minimum wage is increased, for all intents and purposes it will be a case of all things being equal for all employers paying minimum wages, not just small businesses, as stated by Cassel. Yes, some prices may go up to cover those higher labor costs. However, if only 2.5 percent of working Americans, as stated by Cassel, are employed at minimum wage, and many only part time at that, does that portend a significant effect on our economy? I would speculate it is very likely to be economically minimal if only such a small portion of all employed Americans now earn the minimum wage.
There is an upside argument for increasing minimum wages that I have not yet heard from any media. As a former employer, I can attest that paying a higher wage makes your employees a more valuable asset.
Employers paying more for labor will hopefully recognize that value and hire more carefully, giving more attention to training and empowering their help. You and I may get better service, as a result, from better-trained, more knowledgeable people. One can only hope to someday hear a sincerely interested person ask ,"Would you care for fries with your burger today, sir?"
