I believe in a minimum wage. Companies adapt to regulation in the same way that they adapt to market competition. If a community insists that companies have to pay at $7.50, a company has two choices: figure out how to create a profitable business even while paying this much or go out of business. A community has no obligation to keep in business a management team that can't figure out how to design a business to be profitable while paying people something approximating a living wage.
That said, there are at least two things that need to be considered in setting a minimum wage.
The first is the current distribution of wages. A third of Americans make an annual salary that equates to less than $10 an hour. Half make less than $15 an hour. If you - as Seattle has recently done - decide that the minimum wage should be $15 an hour, you have to explain yourself. I completely agree that laggards who can't, say, pay at least $7 an hour should be forced to change their business model or close shop. I like the idea of a legislative sheep dog nipping at the heels of the businesses that are in the bottom 10 to 30%, forcing them to move faster. It's a different thing, though, to suggest - as a $15 an hour wage does - that all the jobs should be above average. They won't be.
And that takes us to the next problem with the minimum wage. Whether it is set to $1 an hour or $25 an hour, there will be some people who aren't productive enough to cover that wage. It makes sense to tell businesses that they have to pay a certain minimum; regardless of what it is, though, some people are not productive enough to merit hiring. Those people need subsidies of some kind; not all needs will be addressed with a living wage.
The deeper need is for study of how jobs are evolving and a search for ways to move median productivity and wages. Individual success moves you from the bottom of a bell curve to the top; community success recognizes that there will always be one person at the bottom and one at the top of the distribution and will focus instead on moving the whole curve.
R World (Ron Davison muses aloud)
I don't understand supporting am increased minimum wage. You are literally banning people from working if they are not as productive as you think they should be. You are also banning creative forms of business, why can't my father-in-law make a couple bucks an hour helping out at the Home Depot down the street? He wouldn't be worth $9 an hour, much less $15, but he has knowledge that would be useful. Sadly his only option is to volunteer his time because being paid $0 is legal.
ReplyDeleteThe minimum wage is a horrible anti-poverty measure, even if it works like it's proponents want it to, and may actually exacerbate poverty by making full time work harder to get.
I don't see how it is an intelligent response to existing problems.