Ore. minimum wage soars — Expect a $20 Whopper?

By Jan Meekcoms
Oregon NFIB
(Originally published in Salem Business Journal)

Anti-fast-food crusaders rejoice! Your cause is getting some unexpected – and likely unintended – traction from the twin threats to burgers and fries everywhere: Obamacare and the state’s minimum-wage rate.

To take the latter first, the minimum wage has always been, and will always be, an entry-level wage, paid those just entering the workforce. As the U.S. Bureau of Labor Statistics put it in its biennial Characteristics of Minimum Wage Workers report, “Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over.”

In other words, it is extremely rare for a head-of-household to be trying to raise a family on the minimum wage. In fact, the teens and young adults who start out at the minimum wage don’t stay there very long. That’s why boosting the minimum wage rate has the commensurate effect of lowering employment for teens, young adults, and even adults and seniors looking to earn a little extra cash.

On Jan. 1 2014, Oregon’s minimum-wage rate shoots to $9.10 an hour, about $2 more than the current federal rate. In practical effects, it means goodbye to many entry-level jobs. Since it’s nearly impossible to start out one’s career in a mid-level position, the reduction of the entry-level jobs produced by fast-food franchises and mom-and-pop restaurants is a serious issue that has real implications for the middle class.

As for Obamacare’s role in the killing of employment opportunities, by now, everyone but the staff in the bunker of 1600 Pennsylvania Avenue is aware of its near-total disaster.

One of Obamacare’s many mistakes was to classify full-time workers as those working 30 hours, instead of the traditional 40 hours. For those who like their arguments presented in dollars and cents, Andrew Puzder, the chief executive officer of CKE Enterprises (Carl’s, Hardee’s, La Salsa, Green Burrito) put it succinctly in a guest editorial he penned for the Wall Street Journal.

“The logic for business is simple. If you have three employees working 40 hours per week they will produce 120 labor hours. Five employees working 24 hours per week also produce 120 hours. Employers must offer the three full-time employees health insurance or pay a penalty. They have no such obligation to the five part-time employees, making part-time employment less costly. Make something more expensive and employers will use less of it; make something less expensive and they will use more of it.”

The combined impact of a minimum wage increase with Obamacare’s costs are likely to add up to Oregon offering the most expensive fast food in the nation. Get ready to pay $20 for your next burger, fries and Coke.

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