Anti-Small-Business Agenda Picking Up Speed

Could this session of the Oregon Legislature make its mark as the most anti-Main Street, anti-small-business one in state history?

Bills to give the state greater authority to level cease-and-desist orders against employers without due process (HB2386) and more power to attach liens on the personal property of employers for alleged wage violations (SB718) are proceeding nicely through the legislative process.

So, too, are measures (HB2005/SB454) shaking down small-business owners for the few remaining coins in their already micro-thin profit margins in order to fund a paid-sick-leave scheme. No small initiative that one. The Legislature’s own Revenue Office put the tab at $976 million.

Wait. There’s more. Seven bills raising the state’s minimum wage are now under consideration. They would increase the rate from between $10.75 an hour by 2016 to $15 an hour by 2018. Three additional bills would allow local governments to set their own rates, creating a crazy quilt of minimum wages throughout the state.

If you remember nothing else about the minimum wage, know that it is — and always will be — an entry-level wage earned almost exclusively by teens and young adults starting out on their work lives. Raising it has only one immediate, but lasting, effect: Loss of job opportunities for them and for the low-skilled. Raising it does nothing for the middle class, and certainly nothing to alleviate poverty.

“Minimum wage workers tend to be young,” reports the U.S. Bureau of Labor Statistics. “Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less.” 

Forbes magazine’s Jeffrey Dorfman took a hard look at the Bureau’s numbers and concluded, “Within that tiny group, most of these workers are not poor and are not trying to support a family on only their earnings. In fact, according to a recent study, 63 percent of workers who earn less than $9.50 per hour (well over the minimum wage of $7.25) are the second or third earner in their family and 43 percent of these workers live in households that earn over $50,000 per year. Thus, minimum wage earners are not a uniformly poor and struggling group; many are teenagers from middle class families and many more are sharing the burden of providing for their families, not carrying the load all by themselves.”

Poring over two decades worth of minimum-wage studies, economists David Neumark from the University of California Irvine and William Wascher, a researcher for the board of governors of the Federal Reserve Bank, wrote in a 2006 paper submitted to the National Bureau of Economic Research that “ … we see very few — if any — studies that provide convincing evidence of positive employment effects of minimum wages … the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.”

Seven years and subsequent minimum-wage studies later, Neumark and Wascher came back with an analysis of those, “We conclude that the evidence still shows that minimum wages pose a tradeoff of higher wages for some against job losses for others, and that policymakers need to bear this tradeoff in mind when making decisions about increasing the minimum wage.”

Even Hollywood understands the harm minimum-wage rates can often do. In a March 16 guest editorial by Tim Robbins in the Los Angeles Times, the politically liberal actor took issue with his union’s plan to eliminate the minimum-wage exemption it grants to theaters with fewer than 99 seats.

“If [Actor’s] Equity passes its proposal, it could, in effect, severely limit opportunities for hundreds of Los Angeles actors … No one is being exploited here.”

So why, in the face of the overwhelming body of economic research showing the harm, not the help, constantly raising minimum-wage rates do, does it still continue? Because, it is the most Teflon-coated-against-criticism, public-policy issue of all, and the most politically self-serving. 

So, state representatives and senators, if you have to vote for increasing the minimum wage, do so honestly, knowing that all you’re doing is eliminating teen and low-skilled employment opportunities—while raising the cost of goods and services—nothing else.