Starlee Rhoades

Wage hike would hurt, not help

Posted on March 18, 2006 | Type: Op-Ed | Author: Starlee Rhoades
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This year a ballot initiative is moving to establish a minimum wage in Arizona. The wage would initially be $5.95 an hour and would rise to $6.75 an hour in 2008.

Arizona currently has no state-required minimum wage, but employers are required to comply with the federal minimum wage of $5.15.

It's a safe assumption that most Americans want to reduce poverty and give all workers a chance at the American dream. But a higher minimum wage tends to put the lesser skilled among us out of work.

When employees become more expensive, employers hire fewer workers. This is why former Federal Reserve chairman Alan Greenspan objects to the minimum wage. As he puts it, the minimum wage "destroys jobs."

The Arizona Daily Star's editorial supporting a minimum-wage hike pointed to three states in our region as examples of a higher state minimum wage working. The minimum wage might be higher, but it only works for those who can find employment.

In 2005, Washington, with a minimum wage of $7.63, Oregon at $7.50 and California at $6.75 all had unemployment rates nearly a full percentage point higher than Arizona's.

A percentage point may sound small, but if Arizona had Oregon's unemployment rate, there would be an additional 40,000 Arizonans out of work.

A higher minimum wage chops the bottom rungs off the socio-economic ladder, making it harder to enter the work force. Entry-level work is what gives many employees the initial job experience and training they need to advance.

Equally important, minimum-wage jobs are usually a first step. Within a year, the vast majority of minimum-wage workers see salary increases of 30 percent. And among workers over age 25, less than 1 percent are paid the minimum wage.
Minimum-wage jobs tend to be a steppingstone, not a final destination.

In any case, there is nothing shameful about taking an entry-level, minimum-wage job. We all start somewhere. Most of us would probably agree that an opportunity to work is better than no opportunity at all.

With all economic regulations there are trade-offs, and a higher minimum wage is no exception. There is no question that a higher wage will help some people who get minimum wage, but there is also no question that there will be fewer minimum-wage jobs available. The research on this point is abundantly clear.

Entry-level workers need an opportunity to learn on the job. A higher minimum wage will give fewer people the opportunity to do that. Raising the minimum wage is well-intentioned but ultimately may harm the very people it is intended to help.

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