The debate rages on. Will raising the minimum wage increase prices, will it cost jobs, will doing so cause minimum wage workers to lose working hours … and most important will raising the minimum wage provide a net gain to minimum wage workers and the middle-class as politicians claim?
Following is an excerpt from a WSJ article 3-29-16 about California raising its minimum wage to $15.00 an hour by 2022.
John D’Amanda, a 56-year-old McDonald’s cashier in Oakland, said a higher wage could allow him to move out of a group home where he shares a room and relies on groceries from a food bank. The pay increase could even let him to propose to his girlfriend.
“It would make a huge difference,” said Mr. D’Amanda, who has taken part in several “Fight for $15” protests. “I want to get married, but I can’t afford it.”
Mr. D’Amanda makes $12.55 an hour under Oakland’s wage law. He said when that increase went into effect last year his hours were cut to 16 a week from 25. He plans to ask for more hours or seek out a second job.
First, a 56-year-old man is far from the typical minimum wage earner. Second, after reaching $15.00 an hour he will still be a low skilled, low-income part-time worker subject to the travails of such a job. Finally, will an increase of $61.25 a week (assuming he gets back to 25 hours a week) less at least payroll taxes change his life to enable him to meet his goals; ignoring the very likely overall rise in prices for goods and services that must result from such a change; modest or not?
The starting salary for an elementary school teacher in most California districts is about $39,000 only $4.32 an hour more than the new minimum wage. For police officers the low-end salary ranges from about $36,500 to $39,000.
Does anyone seriously think that this compression in cash compensation will go unnoticed by the public employee unions?
Providing a modest income boost to minimum wage workers absent the normal market wage drivers sounds great. It makes for appealing political rhetoric, but it is not without a variety of consequences many of which are negative not only for these workers, but for the middle class as well. In the final analysis, these workers we are trying to help are in the same place as they were before.
What we are doing is boosting them one step up on the economic ladder while adding another rung simultaneously.