During my newspaper career I covered technology, biotechnology and other mind-expanding fields, but economics proved my most challenging beat. Behind a shroud of statistics, economists argued views that could not be proven but which nevertheless influenced lives and fortunes. One eddy in this theological swirl has been whether minimum wages stabilize pay or depress employment.
As far as I can tell the answer is yes. In some circumstances both effects occur. Minimums put a floor under wages and help folks at the bottom. But propping up wages gives employers all the more incentives to automate or eliminate entry level jobs.
I found two articles that touch on these issues; one is a labor-backed study asserting that a floor on wages is one way to reduce taxpayer-supported social welfare costs; a second piece announces a proposal by former California Gov. Arnold Schwarzenegger for a further raise in the state minimum, already then higher than the federal floor.
Forget the statistical arguments. I was a minimum wage restaurant worker before I went in the Navy (and I earned sub-minimum wages before that). And in the 1980s, when I ran a typesetting business, I hired a local teenager for minimum wage, and justified the expense by having him make deliveries on his skateboard.
As a minimum wage teen I competed with immigrant adults. No one asked then whether they were undocumented. As an employer I got a warm and fuzzy feeling for helping out a young fellow. When he left me to work for a local screen printer I got a “thanks” from his new employer. My young charge had learned the essential soft skills — show up, listen and work. But I was secretly glad he left. Our shop didn’t make enough deliveries to keep his skateboard wheels spinning.
There should be a common ground in this debate — wage stability does concern government in a consumer economy because them as ain’t getting paid ain’t shopping. But since U.S. employers don’t compete in a vacuum it isn’t fair to make them prop up wages when they have no way to prop up prices for their goods or services.
Wage erosion is a subjective, almost invisible phenomenon. But that doesn’t absolve public policy from playing a role. When the swine flu threatened to reach pandemic levels, we didn’t throw up our hands and say, “Oh, it comes from China, what can we do?” or “We can’s seal the borders.” We did what we could. And we got lucky.
We can’t be paralyzed by globalism. We have to be logical rather than ideological. Setting, enforcing (there are evaders) and strengthening minimums creates a ladder into the workforce for young people and a cushion for the working poor. We need to figure out businesslike ways to accomplish these social goods.