Raising the Miminum Wage Slows Job Creation RED COLUMN
By: Matthew Issent
Discussions over the minimum wage have, rightfully, been focused on raising the standard of living for working families. The costs of healthcare, higher Education, and retirement have grown considerably over the last few decades. Other costs, like grocery bills, have increased modestly. Which other costs, like clothing, have remained relatively flat, adjusted for inflation.
The federal minimum wage of $7.25 had been on the books since 2009. Twenty-seven states have minimum wages higher than the federal minimum, and a number of others have the same state minimums that the federal government has. A number of cities have minimum wages that are higher than the state minimum wages – Seattle’s $15 an hour minimum being one example of that.
The push for minimum wage increases puts the pressure on supporting living incomes for working families solely on employers. Smaller businesses have a much harder time supporting those kind of increases. Smaller companies are able to compete with larger ones. Data is mixed when it comes to who pays more in hourly wages, but over two thirds of smaller businesses are already paying above the minimum wage.
Smaller companies are over 99 percent of all companies, and they produce 75 percent of jobs annually. Among the small businesses in our economy are many that are sole-proprietors, meaning that the business owners hire no employees. That makes the degree to which other small businesses create jobs that much more significant.
Medium sized and larger companies pay out more in benefits compensation than smaller businesses. Large companies have the manpower and money needed to provide robust benefits packages. This advantage makes it harder for smaller businesses to compete and for smaller businesses to keep operating with the best talent, or at all.
Instead of raising the minimum wage and putting pressure on the small businesses that create new jobs, we should be passing policies that ensure tuition-free higher education and that trade school is available for everyone. We should institute a Medicare-for-all, single payer healthcare system that takes the pressure off of employers to provide healthcare benefits. We should expand Social Security to make sure that everyone can retire with dignity, even if they couldn’t afford to save enough during their working years. Policies to make childcare more widely available and affordable are needed as well.
A strong safety net that provides the basics of civilization could be funded by taxes levied on everyone, based on their ability to pay. If education, health care, and retirement insurance were guarantees of citizenship, rather than benefits of employment, earning $7.25 an hour or a bit more will not curse working people to poverty.