Raising minimum wage a nail in state’s economic coffin

Letter to the Editor, Southern Maryland Enterprise, November 6, 2013

My first job, outside the family farm, was at a local service station. I worked there three days a week, spending most of my time scrubbing mud out of the car wash. I made minimum wage, which was just enough for me to pay for gas and to buy some clothes so I didn’t have to ask my parents for money. I am not sure the owner would have hired me if he had to pay me more. After all, on the days I didn’t work, the owner would come in and clean the place himself.

Looking back, the best thing about that job was that I gained work experience and some skills that helped me eventually move out of an entry-level position and move up the ladder. Given the current economic conditions in Maryland, young people are struggling to find work, and entry-level positions might just be their only way into the workforce and their only opportunity to move up the ladder. That is why comments, from all three Democrat gubernatorial candidates, to raise the minimum wage from $7.25 to above $10 per hour, a 38 percent increase, are troublesome.

Arguments to justify the increase will no doubt focus on those struggling to support a family on minimum wage. But, keep in mind that only 2.9 percent of employees actually work for the minimum wage. Very few of those workers actually fit the projected stereotype as being single and poor. Two-thirds of them come from families making 150 percent above the poverty line. In fact, the average family income of a minimum wage worker exceeds $53,000 a year.

Instead, we need to understand the outcomes of similar increases enacted in other states and cities, such as Washington state or San Francisco. As legislation forced increases to the minimum wage, increased labor costs forced businesses to make tough decisions. Businesses moved, employee layoffs occurred and employee hours were reduced.

Adding more insult to injury, these same communities saw local price inflation for consumers. Imagine, almost overnight, the dollar menu at your local restaurant becomes the $1.99 menu. Despite the wage increase, the money earned at the minimum wage job no longer stretched as far as it once did. Inevitably, the legislation ended up hurting the exact people it was designed to help.

While raising the minimum wage might seem like a quick fix, its impact will only come back to haunt us in years to come. After all, if raising the minimum wage was the magic bullet, it could be raised to $20, $30, $100 an hour without any negative implications, and we know that is not true.

Those in charge would serve us all better by focusing on promoting policies that help reduce the cost of living, improve our quality of life and increase opportunities to succeed, rather than policies that simply make people more comfortable living at poverty-level wages.

Solutions are possible. We need polices that make it easier to acquire the skills necessary to get that first job so that young people and disadvantaged workers have the opportunity to move up the career ladder.

We need policies that reduce taxes and regulations and encourage people to invest and expand their businesses. We need policies that will lead to economic growth, which eventually leads to natural wage increases. With the workforce participation rate at a 40-year low and our state’s unemployment rate 1.5 percent higher than neighboring Virginia, raising the minimum wage right now would be yet another blow to Maryland’s business competitiveness, yet another nail in Maryland’s economic coffin.

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