Issue 2 redux

Below is a piece about Issue 2 from Wizblog, a much better articulation of why Issue 2 needs to go down.

Ohio Issue 2

Issue 2 supporters would hang out a "No New Business Wanted" sign at the Ohio border, and hurt the very category of workers they purport to help. But hey, they'll feel good about themselves. For a state that already has a poor business climate and high income tax rates, I think a 33% hike in the minimum wage, with additional escalators, will function to hurt the jobs situation more than it helps. Jonathan H. Adler of CWRU, writing at NRO today, says the minimum wage hikes and future built-in increases would be a job-killer for the state.

The economic case against a minimum wage increase is well known. Raising the minimum wage slows job growth by increasing the cost of labor. It is a basic economic truth that when the price of something goes up, the amount demanded declines. So, when the government mandates higher wages, unemployment rises as a direct result. Those workers who keep their jobs may earn more, but this comes at the expense of those who are left without jobs.

Issue Two proponents argue that the majority of minimum-wage workers are adults (over 20) — and thus deserve a raise. The fact is that most minimum-wage earners are between the ages of 16-24 — and two-thirds only work part-time. People in their early twenties are certainly adults, but they are also more likely to be students or living with their families, and are rarely a household’s primary wage earner. A high-school student delivering pizzas, a 23-year-old graduate student who works in a coffee shop, or and a parent who works part-time to supplement his or her spouse’s income while leaving time for family obligations is more likely to earn the minimum wage than a family’s primary wage earner. Indeed, the average family income of minimum-wage earners is over $60,000.

Those who think minimum-wage increases are a matter of social justice ignore the fact that increasing the minimum wage cuts off the lowest rungs on the ladder of economic opportunity. Forty percent of workers earning the minimum wage were unemployed a year earlier, and the typical minimum wage earner does not earn the minimum for long. Most minimum-wage earners receive a raise within a year of employment. As young workers learn new skills, their productivity rises, increasing their value to their current and other potential employers.

For about half of my 29 year career in the employment and job placement industry, part of my job was managing a multi-office temporary services company in the Akron-Cleveland-Canton marketplace. We had a varied practice, with clerical and skilled hourly workers, but in terms of sheer numbers of employees, the biggest segment was what is called "light industrial", what you might call the bottom rung of the employment ladder.

I know conditions vary around the country with farm workers and large immigrant populations, but our market would never support paying minimum wage. And even at starting wages well over minimum, the problem was one of supply, never demand. We're talking about the labor pool after the jobs at the pizza and fast-food joints, mall stores and landscaping companies are taken. The work is often more physically taxing than taking tickets at a theater, or ringing a cash register at Orange Julius, but unlike much of the mall work, the need for labor with these companies is not temporary or seasonal.

Here in the Midwest "Rust Belt", from the mid-eighties into the 00's, we were not paying minimum wage to our unskilled workers, because they were hard enough to find and retain even at significantly higher pay rates. The marketplace was working, and it continues to work. In a job like assembling parts, or packing items in boxes, or taking plastic parts out of a machine, our clients wanted one thing from us as a service provider. Reliable workers. Some of them defined that as loosely as people who show up for work on consecutive days. And you wouldn't believe how often it was difficult to deliver even that. Anyone who owns a business large or small, or who is chartered with hiring entry level, unskilled workers of any sort, will tell you the same thing. It's hard to find people who want to work.