The Great Minimum Wage Deception – Northeast Oregon Business News

The Great Minimum Wage Deception

By Anthony K. Smith
 
Passed by voters nearly 14 years ago, Measure 25 promised to take the minimum-wage issue out of politics for good, by linking it forever to annual increases in the federal Consumer Price Index.
 
“Measure 25 fixes the problem, and takes the issue out of the political arena,” assured the American Federation of State, County and Municipal Employees (AFSCME) in the state’s November 2002 ballot pamphlet. The CPI link would “help it to keep pace with inflation, so that full-time working Oregonians do not have to live in poverty,” promised then-Secretary of State Bill Bradbury.
 
Gov. Kate Brown’s signing of Senate Bill 1532 making Oregon’s minimum wage the highest in the nation vindicates those who argued correctly in 2002 that we would be having this debate again.
 
What is the minimum wage, and what should every citizen know about it?
 
The minimum wage is an entry level wage, earned primarily by teens and young adults starting out on their working lives. It is not at all a family-sustaining wage or a wage that can lift anyone out of poverty, no matter how many increases. Supporters of SB 1532 denied this in speeches given on the House and Senate floors of the Oregon Legislature, but offered few unbiased studies to back their claims.
 
Discussion of the minimum wage must by necessity begin with the mother study from which all other studies spring: The U.S. Bureau of Labor Statistics’ Characteristics of Minimum Wage Workers, 2014 (the last year for which statistics are available).
 
There aren’t many minimum-wage earners in the nation, “Together, these 3.0 million workers with wages at or below the federal minimum made up 3.9 percent of all hourly paid workers,” according to BLS. “Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up half of those paid the federal minimum wage or less.”
 
Here in Oregon, the Bureau of Labor and Industries pegs the number of minimum-wage workers in the state at about 100,000, or 6 percent of the total workforce.
 
Economist Jeffrey Dorfman examined BLS’s numbers and wrote in Forbes, “… minimum wage earners are not a uniformly poor and struggling group; many are teenagers from middle class families and many more are sharing the burden of providing for their families, not carrying the load all by themselves.”
 
Do some workers have minimum wage careers? is the title of a paper in the Monthly Labor Review. Authors and economists William J. Carrington and Bruce C. Fallick write, “ … a study by Ralph E. Smith and Bruce Vavrichek examined the 1-year earnings mobility of workers that initially worked at minimum wage jobs. They found that 63 percent of the minimum-wage workers in their sample were employed at higher-than-minimum wage jobs 1 year later. Also, Bradley R. Schiller found that only 15 percent … still had any (minimum wage) experience after three years, which suggests that long-term minimum wage employment is rare.”
 
Writing in The Wall Street Journal, Warren Buffett said, “I may wish to have all jobs pay at least $15 an hour. But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skill.”
 
Mitchell Englander offers a street-level view. The Los Angeles city councilman was the lone ‘No’ vote to increase his city’s minimum wage to $15 an hour, telling the Los Angeles Times, “Having been both a business owner and a low-wage service worker, I know firsthand about the struggles business owners and their employees face every day. I’ve had days when paying my employees meant that I did not take my own paycheck. This wage increase may hurt the very people it is designed to help. Most minimum wage jobs are in low-profit-margin industries or small businesses that are easily relocated to one of more than two dozen cities bordering Los Angeles … This competitive disadvantage doesn’t support local job creation or retention.”
 
Governor Brown’s action doesn’t even guarantee a halt to a $15 per hour ballot initiative gathering signatures for November. Where will it all end? In a great deal of job loss. That much is certain.
 
 

Anthony K. Smith is Oregon state director for the National Federation of Independent Business.