Harry's Gang: Minimum wage is a major conundrum
April 30, 2021
There’s a lot of talk about raising the federal minimum wage to $15 an hour, which is one of the campaign promises of the Biden administration. I’m uncomfortable with such a high minimum wage, but I understand the issue is not as simple as either side wants us to believe.
For example, business people tell us that many small businesses won’t be able to afford such a high minimum wage, and will have to close down. But I think most businesses will adapt. There will be a completely new way of providing the services those businesses offered. Remember when every gas station had a crew of kids to pump your gas, clean your windshield, and maybe even check your oil? Now, there’s not a single station in town that even pumps your gas anymore; you do it all yourself. Grocery stores would bag your groceries and carry them out to your car. Now, many stores don’t even have cashiers; you actually scan and pay at automated stations. So, as labor costs rise, we’ll see a change in services provided.
Certainly, some gas stations and grocery stores went out of business when they couldn’t convert their operations to deal with rising minimum wages. But then the market responded — convenience stores opened up everywhere. Gas stations started selling groceries. The economy has a way of fixing itself. It’s one reason our country has thrived all these years.
On the other side, we hear those who complain that a person working full-time at a minimum wage job can’t afford basic housing or food and clothing. That’s probably true, but it should be mostly irrelevant. The burden of ensuring every person has adequate housing, food, and clothing (and some say medical care, but that’s a different argument) falls on society, not business. It’s why we formed a government in the first place. Our Constitution even starts by stating the government’s job is to ensure the general welfare of our nation. And, frankly, the government does a pretty good job of doing that. We have all sorts of programs to help poor people, from food stamps and daycare assistance to housing vouchers and cash assistance. If a person relies on a minimum wage job to survive, society pitches in to help.
Some think the marketplace should decide the minimum wage. Thinking that free enterprise is the answer is as naive as believing socialism works (true socialism, not the “socialism” buzzword used by the conservatives to scare people into believing government regulations are bad). Government oversight and regulation has improved society and provided an opportunity for nearly everyone to succeed, not just those who were born into wealth and prosperity. And, in fact, the marketplace does have a huge impact on prevailing wages. There’s no government regulation that forces Upper Lakes Foods to start its warehouse workers at minimum wage, and in fact, starting wages at ULF are substantially higher than minimum wage. They’ve made a choice to pay higher wages because they’ve decided paying more benefits their company, for whatever reasons. That’s the marketplace.
I’ve heard that labor unions support a higher minimum wage, in part because many union wages are tied to the minimum wage. If the minimum wage increases, union wages increase. That’s their prerogative, I guess, but it seems to me that it would be better for everyone if unions focused on increasing union membership and showing how valuable unions are in setting reasonable expectations for the value of skilled and trained workers. I think more people would benefit from unions if initial training wages were borne by the businesses and organizations that provide entry-level positions at minimum wage; as workers increase their skills in certain areas, they’d qualify for union positions.
Some have suggested that if the minimum wage is $15 an hour, there should be some exceptions for entry level, teens, or small businesses and, in some situations, tipped employees. I think we have to be careful how we carve out those exceptions. There are plenty of jobs that provide valuable work experience for teens, for example, that will disappear if we have to pay them $15 an hour.
We need a lot of careful discussion before deciding to raise the minimum wage to $15 an hour.
Pete Radosevich is the publisher of the Pine Knot News community newspaper and an attorney in Esko who hosts the cable access talk show Harry’s Gang on CAT-7. His opinions are his own. Contact him at [email protected]