Chris Gregoire and John Kitzhaber, the governors of Washington and Oregon respectively, want the federal government to raise the minimum wage and then put in place a system for automatic wage hikes in the future.
Based on our experience, we offer three proposals to help build an American economy that works for everyone. First, Congress needs to raise the federal minimum wage. At $7.25 per hour, or roughly $15,000 per year for full-time work, the minimum wage no longer provides a path out of poverty and remains decades out of date. If the minimum wage had simply kept pace with the rising cost of living since the late 1960s, it would be more than $10.55 today.
Second, Congress needs to raise the sub-minimum wage for tipped workers, which has been stuck at $2.13 per hour since 1991. Tipped workers are almost twice as likely as are all other workers to fall beneath the federal poverty level. Our states have set the minimum wage for tipped workers equal to the full value of the minimum wage for all workers, eliminating the disparity in pay levels altogether.
Third, Congress should learn from the example of our home states and index the minimum wage to rise automatically each year with the consumer price index. Indexing the minimum wage will prevent the purchasing power of the minimum wage from gradually eroding as a result of the rising cost of living. The small, automatic cost-of-living adjustments that our states have adopted also give businesses greater predictability over their payrolls each year by breaking the cycle of political gridlock over the minimum wage.
It never ceases to amaze how liberals refuse to believe that the economy reacts to policy like this. They seem to think that they can waive the government’s magic wand and raise wages without the people who pay those wages reacting in some fairly negative ways.
The additional wages for these workers doesn’t appear out of thin air. It must come from somewhere. Business owners must fine room in their budgets for higher labor costs. That means several things will happen. Prices will go up as business owners charge more to cover additional overhead. Jobs will be eliminated as employers seek more labor inefficiencies to cut costs. The quality of goods, services will come down as employers find ways to cut corners.
Raising the minimum wage is terrible policy – the last round of federal minimum wage hikes drove unemployment rates for young and low-skill workers to record levels – that ends up hurting the very people it’s intended to help.
Think of it this way: The minimum wage is a tax on low-wage labor. And you get less of what you tax of. Some workers might enjoy higher wages, but others are going to lose their jobs entirely.
Regulations are static, but markets are dynamic, and react to the regulations. But liberals never quite seem to catch on to that.