“One of the great mistakes is to judge policies and programs by their intentions rather than their results.” – Milton Friedman
This is possibly the most important sentence ever spoken by an economist. If one actually cares about people, then she must care about results. So, what would the result of a nationwide $15 minimum wage actually be?
I believe that 99 percent of the people who support the national $15 minimum wage do so out of true concern for people in minimum wage jobs, but in truth have given very little thought to what that means. The mantra is that everyone deserves a “living wage.” The problem with that comment is that it is not factual; every single worker does not need to be paid a living wage.
My 13-year-old son has an entrepreneurial streak (the apple does not fall far after all). This summer he took responsibility for our yard care and he also mowed lawns for some neighbors. My 13-year-old son is a worker who does not need to make any money at all. His parents provide for every “need” he has. Some of our friends’ sons have started a business taking garbage cans to and from the curb on garbage day. These workers do not need a living wage.
Minimum wage is meant for workers such as these. Young people, with no employable skill or experience, in need of a first job. My first official job for an established company (I had a similar entrepreneurial streak and cleaned pools as a kid) was making sandwiches at Subway for minimum wage. After a few months I took my food service experience down the street to Bennigan’s and started waiting tables. It represented a big raise. I did that until I turned 21 and then got promoted to bar tender. I made more in one night tending bar than I made in a week making sandwiches, but would have never gotten that chance if I didn’t have that minimum-wage job.
The result of a national $15 minimum wage is that these early life opportunities will be gone. That is not an opinion, it is economic reality, and it happens everywhere in the world when higher minimums have been set. So that is one result of the $15 minimum wage: fewer jobs for younger and inexperienced workers.
Having said that, there are grown adults in our country who actually are trying to make a living and are stuck in minimum-wage jobs. There is disagreement among economists as to the percentage of minimum-wage earners who are in this category, which is unfortunately typical of our national dialog – we no longer even agree on facts. For me it does not matter the percentage; if a single grown adult in the United States of America is stuck in a minimum-wage job, it is a moral outrage. That simply shouldn’t happen, and unfortunately it does.
This is where academic economists completely miss the point, in my opinion. They are so preoccupied with the mathematical models, they forget we are talking about human beings. When one sees articles stating that economists disagree on the impact of a $15 minimum wage, what that means is that they argue over the nuance of one mathematical model versus another. They argue about the number of jobs lost and one model says X while another says Y. That entire argument is a side show.
Grown adults stuck in minimum wage jobs need better jobs. I apologize if I offend, but the truth is that suggesting a slight raise as a solution to that problem is the moral equivalent of saying the solution to slavery was better rations. Wrong! The only moral solution to slavery was to abolish it, and the only moral solution to grown adults working for minimum wage is to create an economy with better opportunities – to do everything in our power to abolish that reality. Unfortunately, that takes more thought than can be written in the 280 characters Twitter allows.
Of course, there is another issue here, and this is of growing concern. Many people seem to forget that we are a country made up of 50 independent states. Many of the most avid supporters of the national $15 minimum wage live in places like New York, Chicago, and San Francisco. In their world, $15 is nothing. One could easily argue that in those locations the minimum should be much higher and that might not even have a negative impact on those young workers. However, Biloxi, Mississippi is a very different place than San Francisco. The national minimum, if we even have one, must be based on the lowest common denominator and that is Mississippi, because they have the lowest cost of living in the United States.
If one cares about people, one has to care about results. The result of a nationwide $15 minimum wage are fewer opportunities for young people trying to get a foot in the employment door, and some number of lost jobs – the exact measure of which economists debate, but there will be some who lose their job. The remaining adults stuck in minimum-wage jobs get a few more dollars and remain stuck in minimum-wage jobs. Those are not the results that caring people should want. At least that is my perspective.
Chuck Osborne, CFA