U.S. Rep. Dan Newhouse, R-Sunnyside, has written an op-ed documenting the disparate effects of minimum wage mandates on urban and rural communities. The piece pegs off last week’s vote in the U.S. House of Representatives to phase in a $15 federal minimum wage by 2025. Newhouse writes,
In Washington state, we have already seen how mandating a higher minimum wage is negatively affecting our economy. With a statewide minimum wage of $12 per hour, Washington mandates one of the highest rates in the country, and it will increase by another $1.50 in January 2020. In an attempt to address wage disparity in large cities like Seattle, which already institutes a $15 minimum wage, this sharp, mandatory increase has led to businesses filing bankruptcy, and it is already having a harmful effect on small businesses and nonprofits in Central Washington.
He describers the effects on the Boys and Girls Club in Moses Lake, which offers a variety of summer and after-school programs and which must maintain a staffing ratio to operate the programs.
The Boys & Girls Club is already struggling, but further increasing the minimum wage to $15 per hour for the entry-level employees they hire will force them to make a very difficult decision: raise participation fees for low-income families or eliminate the programs they offer. Either way, opportunity is lost — whether it be for the child whose family can no longer afford to send them to the Club or for the future social workers who never realized their passion for working with kids.
Moses Lake has an economy quite different from that of Seattle. Newhouse adds,
Every hardworking American deserves to earn a living wage. After the passage of the Tax Cuts and Jobs Act, we witnessed companies across the nation improve benefits and invest in education and training programs for their employees, and wages have steadily continued to rise. We should be empowering employers to create more jobs and offer higher paychecks — not tying their hands and forcing them out of our communities.
This federal minimum wage law attempts to apply a one-size-fits-all starting wage to communities across the country, without taking into account the stark differences in the cost of living, thriving industries, and jobs available.
The Congressional Budget Office recently assessed the effects of various proposed increases in the federal minimum wage, a study reviewed well by the Washington Research Council. But what often gets overlooked is the issue Newhouse highlights: Across the nation and within states, there are wide gaps in economic prosperity. Those gaps affect regions’ abilities to withstand wage and benefit mandates. That’s why Oregon, for example, has adopted a regional minimum wage law.
In Governing magazine, Alan Greenblatt looks at the ongoing challenges faced by rural America. It’s an issue we’re familiar with, here, but it bears repeating.
Rural America is too vast and varied to paint with a single brush. Many rural areas are thriving. Still, it’s clear that overall, the rural economy is falling far behind major metropolitan counties.
Urban areas enjoy an outsized share of the nation’s economic growth, while 30 percent of rural ZIP codes have experienced downward mobility over the past decade. Only one in five small counties has added businesses, on net, since the Great Recession.
The population of metropolitan areas is growing, while rural counties have been flat or even shrinking during the 2010s. Rural areas lag well behind cities in terms of educational attainment. They have a lower level of workforce participation, with fewer people per capita in the prime working ages of 25 to 54, due largely to outmigration.
As Greenblatt’s story makes clear, there is no silver bullet. Perhaps, though, it would be helpful for policymakers to begin by understanding that state and national mandates that can be readily accommodated by superstar metros can place insurmountable burdens on many small, rural communities and their local employers.