01 Apr 1996 Workers of America Unite! — For a Minimum Wage Increase? by Sharon Brooks Hodge

A higher minimum wage appears more probable every day. Recently, 20 House Republicans offered a proposal that would boost the minimum wage by a dollar in two stages. Whether Congress passes this version or the bill introduced by the Democrats, which would increase the minimum hourly wage by 90 cents over two years, the result will be yet another band-aid slapped over a gushing wound. And the fact that more lawmakers are leaning toward such legislation does not legitimize it.

Since the passage of the Fair Labor Standards Act in 1938, labor advocates have contended that a minimum wage will prevent the exploitation of unskilled and part-time workers. The minimum wage has risen 17 times since then from 25 cents an hour in 1938 to $4.25 in 1991. Yet the hue and cry of wage inequity persists. So it is unlikely that another wage adjustment will be any more successful in creating economic stability for those at the bottom end of the pay scale. Why?

For starters, wages are a reflection of relative work skills. You can trust that no one is out there lobbying for a minimum skills floor to coincide with the demand for more money. Until that happens, this segment of the work force will remain unable to compete for higher wages on their own. The argument for raising the minimum wage now would be stronger if it were based on making pay equitable for the work performed. Instead, proponents like Representative Dick Gephardt (D-MO) point only to the decreased purchasing power of $4.25. What Gephardt and others clamoring for a higher minimum wage fail to acknowledge is that boosting pay for that reason alone does little more than continue the endless spiral of inflation.

If that trend is to be stopped, workers must be worth what they are paid, not sheltered from difficult economic conditions. In the late 1970s, the emergence of a global market and deregulation spurred a marked increase in the competitive pressures on American workers. Over the last two decades, traditional wage-setting institutions, such as collective bargaining, market norms and minimum wages, have been unable to protect low-skilled workers from the full force of labor market competition.

And that’s the real problem. But raising the minimum wage does not address it. By giving unskilled hourly workers more money without also requiring more from them in terms of productivity, the value of their contribution to the work force is inflated. They are not actually worth any more to their employers.

And that brings me to my second objection to raising the minimum wage: It’s unfair to those who provide the jobs that feed America. A lot of folks in this country subscribe to a misguided philosophy about earning a living. Plenty of people with nothing to offer want to get a job. But earning money should involve more than simply clocking hours and collecting pay.

In the current anti-business climate, it is the worker who is allowed to hold out expectations. That workers’ quality of life is to be improved at their employers’ expense is an unfortunate consequence of having an intrusive federal government. With the exception of the commendable Reagan years, Washington has consistently overstepped its authority by determining that any job is worth at least a minimum compensation. For employers, the problem will only get worse because this will not be the last minimum wage increase.

Just wait and see, when the buying power of the under-skilled slumps further, the bleeding hearts will insist that corporate America prop it up again. That’s not the way things are supposed to work in a free-market economy. But to say as much is considered “mean-spirited.” How high will minimum wages have to be raised before people realize that the concept contradicts the basic principles of economics? I suppose it will take the folding of hundreds of small and mid-sized companies across the country that will lead taxpayers to bemoan the burden of higher unemployment. More than 644,000 teenagers alone lost jobs when their employers determined they were expendable after minimum wages were raised in 1977.

Raising the minimum wage could be disastrous for ethnic minorities. Fewer jobs will be available. If it becomes harder to get a job, there will be fewer opportunities to get experience. That has more adverse long-term implications than working for $4.25 an hour.

On the surface, raising the minimum wage appears to be a caring act. But in effect, it will put some people out of work while allowing others to earn more without increasing their productivity. That in turn will cripple businesses and raise prices for consumers. Eventually, the minimum wage could deliver a knock-out punch to our economy.

by Sharon Brooks Hodge, a member of the national Advisory Council of the African-American leadership group Project 21, and an editorial writer for the News & Record (Greensboro, NC) where this commentary originally appeared.

Note: New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21.