Monday, January 2, 2006

Minimum wage

I saw an article in the NY Times today on state-specific attempts to raise the minimum wage. Let me make my position perfectly clear, we *do* need to raise the minimum wage nationwide, whether through a federal mandate or state-specific approaches. This is a *key* issue of social fairness. Businesses and economists offer their rationales for resisting minimum wage hikes, but they are not sufficient to sway my opinion.

Greenspan has argued repeatedly that raising the minimum wage will put some unskilled workers out of work. I actually agree with him. That economic "fact" is *true*. But, that's not the end of the story. Social safety net to the rescue. Here's "The Answer"... Yes, some unskilled workers *will* lose their jobs, and others will never have those "lost" job opportunities. But... BUT... lets look at the social costs. Each of the workers that doesn't lose their job will be that much less financially dependent on our social safety net and that much less likely to turn to crime to supplement (or replace) their wages. Those *savings* can then be spent on offering assistance (including meal subsidy, housing subsidy, counseling, and job training) to the *minority* of workers who are out of jobs due to the cold economic impact of raising the minimum wage. Just be sure not to set the non-worker subsidy so high that it is more appealing than the minimum wage job. Or, simply make sure that the minimum wage job is economically more attractive than the non-job (subsidized) alternative). And, if partial subsidies are still available to the minimum-wage worker, make sure that the subsidy is even more attractive than if the worker was a non-worker. The real bottom line here is to eliminate or counter or compensate for the Greenspan economic argument against minimum wage.

I would also put forward the possibility that a state or county government might offer to partially subsidize the minimum wage for businesses deemed to be socially significant, but in difficult economic situations. After all, the alternative is that the local social agencies will have to pay "full fare" for the social impact of workers without any work.

Administering such programs may be a little messy, but it *is* a matter of social fairness, and we need to recognize that having a reasonably-decent paying job is in fact valued by most people.

Here's one angle on administration. Allow businesses to apply for a subsidy for low-paid workers. If a business is in such dire circumstances that it can't afford to pay the full minimum wage, they could apply for the subsidy, through an accredited business-review professional who can "certify" the subsidy need and value to the community of the business offering the jobs.

Final note: for all those restaurants fighting against minimum wage, my view is that tips (actual or estimated) *should* be counted as part of the minimum wage. In other words, many if not most of the tip-oriented businesses should *not* be required to raise their minimum wage. If anything, the minimum wage in tip-oriented businesses should simply be "the cost of doing business" to compensate those workers for simply showing up on slow days when the lack of business gives them no economic incentive to show up at all.

-- Jack Krupansky

1 Comments:

At September 20, 2008 at 11:16 PM , Anonymous ng2000news said...

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