The 2016 election has done little to end the discussion of the minimum wage and its effects on employment, business, and mobility. Washington state and Seattle feature prominently in the national conversation. Passage of Initiative 1433 gives Washington the country’s highest statewide minimum; Seattle’s $15 wage makes it a leader among metro areas.
And while Washington voters and metro officials have endorsed the high-minimum-wage policy, it’s worth examining the potential consequences and considering other strategies for expanding opportunities for low-wage workers and promoting upward mobility. We’ve written often about the importance of education, particularly postsecondary education, to workers seeking entry into Washington’s vibrant economy.
Economist Aparna Mathur has a brief article for the American Enterprise Institute in which she argues that wage hikes should be approached with caution.
The truth is that there are better ways to help low-wage workers. For one, the federal government can supplement incomes by expanding the Earned Income Tax Credit program. A targeted program with no risk of job loss, the EITC has been proven to lift people out of poverty, and it is the best way to boost incomes for poor households.
At the same time, encouraging upgraded skills for workers through greater investments in on-the-job training and paid apprenticeship programs for younger workers would allow for greater upward mobility even for workers starting off in minimum wage jobs.
While boosting wages for workers is critical, helping workers retain their jobs and enabling them to move up the income ladder is even better. The risk of job loss that comes with a minimum wage hike threatens the ability of these workers to get on that ladder. States that are on track to approve such an increase should proceed with tremendous caution.
Washington has already approved the increase, of course, but caution still makes sense. Having adopted the higher wages, it’s arguably even more important for our state to support the education and skill training that Mathur cites as critical to promoting greater upward mobility.
At E21, Dillon Tauzin emphasizes the importance of on-the-job training and notes that the loss of entry-level jobs can also deny job seekers the opportunity to take the first step on the career ladder.
… it is helpful to recognize that an opportunity to work is an opportunity to learn. Hence, the question of the minimum wage is about education. It follows that an opportunity to work at a low wage is an opportunity to learn at a low wage.
There’s anecdotal evidence already that the increased statewide minimum wage has hurt some small businesses, who have reduced hiring and even shut down. But that evidence is mixed and preliminary. And, it’s also clear that the higher minimum wage is but a partial and, in many respects, unsatisfactory strategy for advancing mobility and opportunity.
Ideally, we’ll see the investment in accountable, effective education that will promote career development. After all, entry-level jobs are not designed to be life-time employment, but steps to something better. And that something better will increasingly require students to graduate from high school prepared to successfully acquire postsecondary certification or a college degree.
