Those who argue for a higher national minimum wage, do so in part by refuting the wrong criticism.
In a recent New York Times editorial “Double the Federal Minimum Wage” the argument is that raising the minimum wage does not cost jobs. Okay, that makes sense since workers are needed at any level. But that non-argument misses the real points:
- Raising the minimum, gradual or not, must raise prices because it raises expenses, especially for small business.
- Raising the minimum, say to $15.00, doesn’t just impact those currently earning less, but those earning $15.00, $16.00, $17.00, etc. it’s called salary compression. A worker currently earning $15.00 an hour at a higher level job is not going to be happy if a lower job pays the same. This also compounds the pressure on prices.
- Raising pay by $1.00 does not cost a employer $1.00. It is compounded by payroll taxes like Social Security and in some cases employee benefits such as a 401k plan match. So a $1.00 per hour raise actually means $1.10 or more.
- Won’t doubling the minimum wage also raise the eligibility standards for safety net programs, thereby reducing benefits/income for some individuals and households?
- In the absence of higher skill levels and faced with higher prices created by not only higher wages, but increased demand for goods and services by minimum wage workers, what progress has been made? Haven’t we just reset low income, unskilled work at a new level?
Raise the minimum wage and index it by all means, but don’t create expectations beyond reality. The only solution for individuals is to get out of minimum wage jobs.