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Minimum wage earners suffering for loss in hours?

July 3, 2017

Critiquing Minium Wage Laws Is About Protecting The Working Man (or Woman)

By Lydia White

Cascade Policy Institute

A team of researchers from the University of Washington produced a study, published by the National Bureau of Economic Research, that measures the effects of Seattle’s minimum wage requirement of $13 per hour.

The study* found that the city’s mandates resulted in 3% higher hourly wages, but 9% fewer hours worked. As a result, the average low-wage employee lost around $125 per month. For low-income households especially, an annual loss of $1,500 is significant.

Jacob Vigdor, one of the study’s authors and a professor at UW, said, “Traditionally, a high proportion of workers in the low-wage market are not experienced at all: teens with their first jobs, immigrants with their first jobs here.”

Low-skilled, low-paying jobs provide the opportunity to acquire knowledge and experience, setting up workers for their next, potentially higher-paying jobs. The least skilled are further disadvantaged when artificially high price floors are implemented. Employers instead search for only the most qualified candidates, leaving more teens jobless, as Cascade Policy Institute’s study on the effects of the minimum wage on youth reported last December.

When economists warn against the costs associated with the minimum wage, it’s not to protect greedy capitalists; it’s to protect the worker from being priced out of the market.

For the benefit of all Oregonians, political leaders should learn from our northern neighbors and repeal the state’s onerous three-tiered minimum wage law.

*The study used a “relatively conservative” $19 per hour low-wage threshold to account for the spillover effect of “miscoding jobs lost when they have really been promoted to higher wage levels….”

  
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Lori July 3, 2017

Don’t forget about wage compression. Those who used to be making $2 over the minimum wage last year when the minimum wage was $9.25, then $1.50 more than minimum when it rose to $9.75 last July, and now are at minimum wage are pretty upset. Maybe their job will increase their pay by 25 cents or so but they still won’t see it as fair. It doesn’t matter how high the minimum wage goes; just the thought of making the bare minimum amount of pay allowed is a disappointment. Also, it will be harder to climb up the career ladder and be rewarded more for a job well done. There will be less of an incentive to work towards a promotion or advancement because the pay will not be as good compared to the bare minimum and it will require much more work, etc. The way to boost morale and increase productivity and employee retention is to give increases based on performance and merit. Increasing wages only because the minimum wage goes up does the opposite.

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