The Minimum Wage Increase: Our Readers Talk Back!

By BLR Founder and CEO Bob Brady

Last week, in a column titled “The Minimum Wage Increase: Does it Really Matter?” I took the position that the coming increase in the minimum to $7.25 would have an impact that was, well, minimum.

Few workers actually make the federal minimum, I pointed out, what with 29 states having beaten the feds to the punch in raising the wage floor for workers. What’s more, each time the minimum is raised, opponents make the same arguments that it will raise inflation and cost jobs. Hasn’t happened yet.

It’s even less likely to happen now. The new minimum will be just 43% of what the average worker makes ($17/hour) instead of the 50% it used to be, so the effect on inflation should be nil. And as for loss of jobs, any effect from a new minimum will pale in comparison to cutbacks caused by skyrocketing healthcare and other structural costs, plus all the incentives to ship jobs overseas. Those are the real demons we need to slay if we want to preserve U.S. employment.

Well, after I had my say, you had yours. And you, dear readers, never fail to amaze me with your ability to poke thoughtful holes in my arguments. This week, we had holes in five varieties telling my why increasing the minimum wage does matter, and matters a lot.

A Far Wider Impact

One Missouri HR professional (name withheld) pointed out that any increase in the minimum wage will affect a far wider employee market than just those receiving the minimum. “The prime beneficiaries,” she explains, “are individuals working with employment—read union—contracts that will now require that their wages rise to maintain the proper distance between the unskilled and themselves. This also has Davis-Bacon implications that reach beyond the directly unionized workforce because of the ‘prevailing wage’ provisions of that law.” (The Davis-Bacon Act requires contractors on most federally funded projects to pay wages similar to those prevailing in the local area for the same jobs on nonfederal projects … often, union wages.)

Rebecca Hopper is HR director at a nonprofit organization, also in Missouri. “We are totally grant-funded so we only have a set amount of funds to run our program,” she wrote. “Any rise in salaries could result in lay-offs [and] less services we can provide to the clients we serve, who are low-income, elderly and disabled.”

Deanna Reeves, who does HR at Yavapai College in Prescott, Arizona, pointed out that some populations are actually harmed by making more money. “What I worry about is the impact on people [many developmentally disabled] who have support coming from the state or federal government and can only make a certain amount a month or have their support cut,” she explained. “Because of the higher wages, they must cut back their hours and that means hours of loneliness, idleness and effect on their families. The ripple effects are great.”

Let the Marketplace Decide

Finally, John Schindler, an HR Manager in Washington state, is worried about an increase’s effect on the American system. He noted that “there is no (nonpolitcally-motivated) evidence indicating today’s labor market needs MW regulation” and went on to say that “in a nutshell …the marketplace (which many of us work within), not the government, is the wiser of the two determinants in setting skill-appropriate pay.”

Agree? Disagree? Not just with me this time, but with all of these folks. Use the Share Your Comments button to let us know, or email me at RBrady@blr.com.

Thanks to all of those who both widened and broadened this important discussion.