Minimum wage increase stirs debate
On Sept. 15, 2011, Labor Commissioner Brad Avakian announced that Oregon’s minimum wage would get a 30-cent bump (from $8.50 to $8.80 an hour) for the year 2012. The increase, which took effect on Jan. 1, makes Oregon’s minimum wage the second highest in the nation. Our neighbor to the north, Washington, is the first at $9.04.
All matters of economics are contentious. No matter how assured one is in his or her outlook on the best way to take advantage of the flow of money, an army of experts and Ph.D.’s stand ready to disagree.
It is easy understand why. Economics is not the science of how best to ensure that every participant wins. Nor has it ever been. There are always losers in economics, and because the losers have their voice, their sympathizers and their advocates, there will always be an argument to be made for change.
Money travels; money changes hands. This is foundational to the science of the economy, as fundamental as Newton’s laws to physics.
This increase in the minimum wage—a typical annual occurrence—is intended to reflect a change in the consumer price index for the year. As can be expected, not everyone is happy with the change. The fundamentals of the debate are as follows:
A higher minimum wage certainly seems like a welcome proposition, especially for those of us already working. To an employer, not so much. To prospective employees and the unemployed, it can be severely bad news.
It stands to reason that an employer required to pay even its most unskilled or introductory positions a higher wage will be significantly more cautious in making new hires. Business owners will then tend to raise their standards, seeking individuals who will contribute better service for a longer period of time; in other words, a more stable investment in the long run.
In some cases, entry-level positions may be eliminated entirely. This can be a dreary prospect for high school to college-aged workers with little to no work experience. For this reason, states with higher minimum wages tend to have proportionately higher numbers of youth unemployed.
We work for money, because we need money to survive. Ideally, we work jobs for which we can earn enough to live (the term is “living wage”—go figure). What constitutes a “living wage” varies throughout the United States, as some locales are more expensive than others. Few would make the argument that an hourly wage of $5.15 (the minimum wage in Wyoming) could constitute a living wage in, say, San Francisco.
(For the record, San Francisco, as some cities have done, has its own minimum wage independent of California’s—over $10 an hour).
Of course, the argument can be made just as effectively for either side. The debate is rooted in an ideology that has only little grounding in logic, so much as preference in one’s outlook. Should more people be paid? Or should fewer people be paid more? Which is a greater indicator of success? Or, even more philosophical which is the greater good? Is it better that people are paid more? Or that more people are paid at all?
Higher minimum wage laws tend to hurt small businesses. The fact that a higher minimum wage may be beneficial to the workforce is of little comfort to small business owners, especially in uncertain, stagnated economic situations like the one we currently find ourselves in. Of course, the absence of a minimum wage, or a small one, yields an equal yet inverse problem.
Hence the conservative/liberal sides of the argument. As a conservative myself—one who earns minimum wage, at that—I’d have to vie for a minimum wage, at the very least, equal to the national average (currently at $7.25).
A significantly higher state minimum wage will do little to improve the economy; it is unlikely that workers will flock to Oregon in order to take advantage of lucrative minimum wage positions they stand little chance of being hired for.
Anything that encourages small businesses to hire new workers will be better in the long run, as long as the weakness in the current economy prevails. For a college city in an expensive region like Portland, PSU students would surely benefit from a lower minimum wage than the current one.
