Debate on wage more about politics than economics
THE purpose of last week's union-driven protests at fast-food restaurants was to generate support for a dramatic increase to the minimum wage.
The protesters, largely organized by the Service Employees International Union, are calling for an hourly wage of $15. "We can't survive on $7.25!" was the chant.
Of course, the minimum wage was never designed to be a "living wage," whatever that means. It's entry-level compensation for inexperienced workers, usually a starting place until the worker acquires the skills to make more money.
Unfortunately for the union organizers, what the protests actually achieved was a nationwide discussion of economics, which do not support the argument for a higher minimum wage.
President Obama has frequently joined the push for higher pay for entry-level workers, arguing that "there's no solid evidence that a higher minimum wage costs jobs." That statement earned the president two Pinocchios by the Washington Post Fact Checker.
The Post reports that researchers David Neumark and William Wascher have surveyed more than 100 studies on the subject and found that "raising the minimum wage leads
to economic distortions and often has unintended adverse consequences for the employment opportunities of low-skilled workers."
A higher minimum wage means more unemployment for the people who currently are most likely to fill those positions. At $15 an hour, entry level jobs are more likely to be filled by higher-skilled workers, making the job market even tougher for people with low skills.
The protesters are right that you can't raise a family on $7.25 an hour, but most are not trying to.
Figures from the U.S. Bureau of Labor Statistics show that half of those paid minimum wage are under 25. Forty percent of them are living with a parent or relative. The Wall Street Journal reports that "the average family income of a household with a minimum wage worker is about $47,023 - which is far above the poverty line of $23,550 for a family of four."
Beyond the figures, there are also philosophical arguments against a higher minimum wage. Individual employers and the employees are the best determiners of the value of labor, not the government.
Private citizens and companies make decisions every minute of every day in the free market about the value of goods and services; labor is simply another commodity that's subject to the same negotiation.
However, we know the arguments by the protesters and their union backers aren't based on Economics 101, but rather on emotion.
It sounds good - at least to some people - to argue that giant corporations can certainly afford to spend "just a little bit" of their enormous profits to help people. (Do you ever notice that they never say that small businesses could pay a little more? It's always the faceless corporation, not your neighbor's dry cleaning business.)
The Congress may eventually raise the minimum wage. Fifteen dollars an hour is ludicrous, but politicians who want to accommodate a particular constituency may agree to $8 or $9. But when it does, you'll know it's about politics, not economics.
Kercheval is host of TalkLine, broadcast by the MetroNews Statewide Radio Network from 10 a.m. to noon Monday through Friday. The show can be heard locally on WCHS 580 AM.