A commentary by Reps. Ruth Briggs King, R-Georgetown, and Mike Ramone, R-Newark (“Minimum-wage hike will hurt more than help,” March 23), implied that the proposed increase was too much in too short of a time frame and could cause a loss in the number of jobs. Thus, some people win, while others lose. They make reference to at least four studies that support their story. However, I point out below several shortcomings.
First, an economic study can help answer an economic question, but it is also a fact that such studies can bring out unfair conclusions because of the bias of the study investigators. Readers can do their own broad internet searches and verify this. I have seen references in business media to studies that say job loss does not necessarily follow wage hikes. It’s a subject too big to argue about in this limited space because you have to look at assumptions, sources of data, goals, what was ignored, who the authors of the studies were, who paid them for their time and if they were compensated to obtain a predetermined conclusion.
Secondly, their implication that a hiked wage will lead to lost jobs is a joke because that claim is based on only a narrow look at the economy. It is a fact that the commercial sector is constantly looking to eliminate jobs, whether or not a minimum-wage hike is being considered. Just think, for example, about all the research and development on driverless cars. Hundreds of thousands of truck and taxi driver jobs will soon go “poof.” Look at “self-checkout” lanes in local stores. These job losses are not happening because of minimum-wage hikes. These losses are happening because automation and robot companies want to sell job-killing products to other companies that want to replace people with machines if it will save money.
Third, I would like to expand on something Briggs King and Ramone said early in their commentary: “The minimum wage was created by Congress as part of the Fair Labor Standards Act in 1938. In part, the intent was to protect the well-being of employees.” However, Briggs King and Ramone devoted all of their subsequent sympathy only to business. What did they say about the well-being of employees? Not a peep. Not even “trickle-down.”
Business owners, landlords, bosses, managers, etc., have much more control over their financial components and can raise prices at any time compared to people at the lower end of the socioeconomic ladder. On the other hand, the people on a minimum-wage income are powerless to control their rent, food prices, transportation costs, medical needs and medical emergencies leading to medical debt, etc., and — if there is any money left after that — entertainment, recreation, savings for a rainy day and retirement.
Just think about this. Take a person on minimum wage and add up typical costs to live. They may have to work several hours to buy a gallon of gas for the car, if they even have a car. Richer people only have to work a fraction of that time to buy a gallon of gas. There are plenty of studies of how financial insufficiency is a risk factor for mental illness, medical illness, domestic abuse, homelessness and suicide.
Inflation — caused by price increases decided by those owners, landlords, etc., to more than pay for the past minimum-wage increases or their decision to just make more money anyway — significantly erodes the buying power of take-home pay. In addition to that picture, job security is much lower than business-revenue security is. The boss can fire you at will, but finding a new job can be difficult, and it gets much worse if you are older or the economy is not hiring. Many employers are converting full-time jobs into part-time jobs to avoid thresholds for certain mandated benefits. Thus, some part-time employees might not get in their “40 quarters” (of work) by the time they reach retirement age and thus get zero Social Security benefits!
How many minimum-wage people get any kind of regular cost-of-living-adjustment increases or “increment increases” in their pay? Minimum-wage increases have taken place in the past to just break even with inflation. And this is only a fraction of the shaky financial predicament that underpaid people are in. And speaking of studies, a Federal Reserve study came out in 2019, saying that a high percentage of people could not easily come up with $400 in an emergency. The Social Security Administration has a fact sheet that says that about 45% of single and 21% of married retirees get 90% of their income from Social Security. Thus, many people are struggling, and their situation is beyond their control. Look at those who live higher up the ladder. If you need legal help, the lawyer is likely to demand at least a $400/hour fee, which he or she can raise to any amount, at any time. Some doctors are moving themselves into a so-called “concierge medicine” business model, where you pay them an upfront membership fee that can be $1,200 to $3,000 in cash (according to one source) — and insurance is not accepted — before they even do any work on you.
Fourth, underlings have always been under the thumb of overlings. Unions started in the late 1800s to help labor fight management for better compensation deals, but union-busting eventually got the upper hand. More recently, for many sectors, management can threaten to move jobs to, for example, China or Mexico or import foreign cheap labor (documented or not) desperate to escape an even worse life in a developing country. And Big Business continually lobbies lawmakers for laws and loopholes favoring management or other “higher-ups.” The only help left that underlings might expect could come from a government move, such as a minimum-wage tax hike. And if inflation swamps the minimum wage, then another minimum-wage hike will be needed in the future.
I appreciate that running a small business might not be a walk in the park, but I will bet that none of the small-business owners will trade places with their minimum-wage employees.
Arthur E. Sowers is a resident of Harbeson.
