Olympia considers $15 minimum wage; WRC examines effect on young workers

A new poll shows 69 percent of Olympia voters favor a $15 minimum wage in the capital city. 

The poll was conducted Jan. 22-25 by Patinkin Research Strategies, a research firm based in Portland, Oregon. According to the firm, 400 registered voters in Olympia were interviewed via telephone about their preferences for a $15 minimum wage.

The poll sampled people who were likely to vote in 2015, and about 65 percent were over age 50, said Ben Patinkin, president of the research firm.

That age breakdown is interesting, particularly when you consider that the workers most likely negatively affected by the rising minimum are the young and experienced. The Washington Research Council recently updated charts telling the story.
Washington teen unemployment rate is considerably higher than the U.S. average, no doubt – at least in part – because of the high state minimum wage (with no tip credit or training wage for young workers).
 
Some of those interviewed by the Olympian expressed concern about the effect of a $15 wage on business and the community.

…Max Brown, an Olympia resident who chairs the city’s planning commission [said], “I understand the argument that you’re going to get more money in the pockets of the people, but small businesses and entrepreneurs are not going to be able to make it work.”

One problem the minimum wage issue fails to address is income inequality and the shrinking middle class, he said. For example, a higher wage isn’t the same as lifting people up into higher-paying jobs through training and education.

“Until you’re able to step aside from the politics and think about it holistically, it’s really difficult to get good answers,” he said. “It’s not a one-size-fits-all kind of thing.”

Right. Training and education expand opportunity for everyone. The elevated wage risks reducing opportunities for young workers hoping to gain the skills and experience that will be careers and expand prosperity.

 
 

Inequality ≠ Poverty … and it makes a difference for policy

Economist Peter Gordon offers a clarifying message that sometimes gets overlooked in political discussions. 

Concerns over poverty are surely justified. But poverty and inequality are not the same thing — and they are purposefully muddled by those with an agenda.

It matters. We focus on expanding the culture of opportunity, increasing the likelihood that poverty will be reduced as people gain the skills and education they need to get ahead. 

Gordon points out one of the hazards of focusing on inequality.

The poverty=inequality misconception is fed by the suspicion that wealth is most likely ill-gotten and/or we live in a zero-sum world. If most people (most voters?) believe either one or the other these we have a problem. 

We doubt that most people fall into that trap. But the reminder is worthwhile.

His brief post provides a link to another Tyler Cowan (another economist) post indicating that America has been much more successful in reducing poverty than the official statistics report

Votes expected soon on labor policy legislation: Sharp divide between chambers

The Associated Press has a good rundown on a number of labor policy issues expected to come to floor votes this week, including minimum wage, workers’ compensation, and paid sick leave. Unsurprisingly, the two chambers have sharply divided views on the proposals.

In the Democratic-controlled House, bills with strong enough backing to make passage seem likely include bills to raise the state’s minimum wage to $12 an hour, guarantee a minimum amount of sick leave and forbid retaliation over complaints of owed wages. Across the Rotunda in the Senate, a coalition of mostly Republicans holds power and has passed out of committee bills that would aid challenges to labor unions, restructure workers’ compensation and create a tier of legal wages for teenagers below the state’s official minimum hourly pay.

So far, leaders on each side have spoken as if they are unwilling to bend to the proposals being considered by the other, which creates the possibility the opposing ideologies in play could mostly cancel out.

The article includes comments from Opportunity Washington partner, AWB.

“If they want to see anything come out of the other side, they’re going to have to work to compromise on common ground on some things,” said Bob Battles, general counsel and government affairs director for the Association of Washington Business.

…”You continue to put costs on top of small business owners, and eventually the small businesses can’t continue to survive,” Battles said. “We’re going to push our small business folks out of the market. They operate on such tight margins already.”

The Washington Research Council recently published a policy brief, The Long-Lasting, Negative Consequences of the Minimum Wage, reviewing the economic literature on minimum wage increases. (Also discussed in this WRC podcast.)
 
In our research report, Opportunity Washington reviewed the importance of enacting and maintaining policies that stimulate private sector investment and job creation. With respect to workers compensation, we noted:
Similarly, the state has consistently had the highest workers’ compensation benefit costs in the country. In 2012, the most recent year for which data are available, benefit costs averaged $840 per covered worker, nearly twice the U.S. average of $434.9.
We suggested reforms in voluntary settlements and the definitions of occupational disease as ways to improve outcomes for workers and control costs.
 
And, regarding the minimum wage and paid sick leave, 
Washington employers and residents alike place a high priority on the equitable compensation and protection of those in the workforce. Policymakers must carefully consider wage and benefits mandates and system to ensure that such protection are maintained in a cost-effective manner so that employers can create more job opportunities for Washington citizens.
As Battles points out, there may be common ground on some of these issues. The first priority, however, must be to nurture policies that expand opportunity and prosperity. 

Maximizing minimum wage, minimizing opportunity? For some, yes.

Efforts continue in the Legislature to increase the Washington state minimum wage, currently the highest minimum in the nation. Mike Rowe, the popular host of Dirty Jobs, recently posted on one of the unacknowledged effects of boosting the minimum wage. He was reflecting on his early teenage job at a movie theater. 

I thought about all this last month when I saw “Boyhood” at a theater in San Francisco. I bought the tickets from a machine that took my credit card and spit out a piece of paper with a bar code on it. I walked inside, and fed the paper into another machine, which beeped twice, welcomed me in mechanical voice, and lowered a steel bar that let me into the lobby. No usher, no cashier. I found the concession stand and bought a bushel of popcorn from another machine, and a gallon of Diet Coke that I poured myself. On the way out, I saw an actual employee, who turned out to be the manager. I asked him how much a projectionist was making these days, and he just laughed.

“There’s no such position,” he said. I just put the film in the slot myself and press a button. Easy breezy.”

He concludes:

From the business owners I’ve talked to, it seems clear that companies are responding to rising labor costs by embracing automation faster than ever. That’s eliminating thousands of low-paying, unskilled, entry level positions.

Anecdotal? Sure, but the Washington Research Council has just published a policy brief and podcast taking a more academic look at the data. The brief has a lot of good information, which lawmakers and advocates may want to evaluate as they consider policies that may have the unintended consequence of foreclosing opportunities for those most in need of the chance to get ahead.

Increases in the minimum wage are a tradeoff. Some gain, but many lose. Those who keep their jobs and their hours benefit. But those employees who lose their jobs or have their hours reduced lose out. Research shows that the negative impacts on individuals and businesses are real and long-lasting.

Make sure the policies are tailored to the objective. It’s not as easy as it looks.

For an interesting look at the other end of the wage curve, consider this: Americans have a 1 in 9 chance of making it into the 1 percent – staying there is the problem.