Letter to the editor: Raising minimum wage will not lift people out of poverty
With the failure of her co-sponsored minimum wage bill, Sen. Heidi Heitkamp, D-N.D., has portrayed Republicans as not caring about struggling families. Allegedly the intent of the bill was to “lift people out of poverty.” It seems simple enough; if people make more money, they will be less poor. If it was only that simple.
The problem with raising it is unemployment. When wages are forced higher, businesses can’t hire as many people. Lost jobs are primarily the lowest-wage earners and the least experienced, meaning the unemployment hurts the poor, young and minorities — the people proponents claim they want to help.
Heitkamp cites the Economic Policy Institute for ways the unemployment shouldn’t be so bad. They call these ways, “Channels of Adjustment,” and they are listed as follows:
* Increasing productivity refers to demanding more out of the worker. Entry-level wages go up, but everyone must work harder.
* Increasing price refers to the employer raising prices of goods sold. Minimum-wage earners’ pay will go up, but everything will cost more. The net effect is the same as not getting the raise. Everyone who makes above minimum wage won’t have increased wages but will still pay more for everything.
* Decreasing benefits give employees less paid vacation, less retirement contribution, etc.
* Wage compression requires that employers decrease salaries or limit raises for those who make above minimum wage, therefore, less opportunity and less incentive to “climb the ladder.”
* Decreasing profits is the poster child of progressive solutions. “The fat cats can just make a little less, so the poorest have a little more.” The problem here is that a significant percentage of minimum wage earners work for small businesses. Many small businesses run a razor slim profit margin with no room to spare. Many already fail due to a lack of profit. For larger businesses, consider who benefits from profit. It’s the shareholders who have stock in the company, which is what all those employees’ 401(k) accounts represent. Decreased profits cause decreased 401(k) value, meaning retirees foot this bill.
If Heitkamp believes increasing the wage will lift people out of poverty, why didn’t she advocate for $15 or $20 per hour, instead of $10.10 per hour, in several steps over three years? The answer is raising the minimum wage has detrimental effects, but when instituted in small, incremental steps, the negative consequences can be blamed elsewhere.
Just like hidden taxes in Obamacare, and thousands of pages of federal regulations, raising the minimum wage is a cost to our economy. We are directed to believe it’s “free.” It isn’t. It’s naïve to believe everything from the federal government is free. With minimum wage increases, it’s employees who pay.
(Becker, a Republican, represents District 7 in the North Dakota Legislature)