There is general support among the public for legislated, government-mandated minimum wages for unskilled, low-skilled, and limited-experience workers. Further, it is considered perfectly acceptable for these workers (and their supporters like labor unions) to use the coercive power of the government to enact minimum wage legislation to attain above-market wages, which they are unable to get on their own in the marketplace.
It’s an economic reality that sellers (employees) always want higher prices (wages), and buyers (employers) always want lower prices (wages), so why isn’t it considered acceptable for buyers (employers) of unskilled labor services to use the coercive power of the government to achieve lower wages through maximum wage legislation?
After all, there are actually many more small businesses in America (28.2 million in 2011, according to the Small Business Administration) than there are minimum wage workers (about 3 million), and many of those small businesses employ unskilled or low-skilled workers. So it would seem natural that those small business owners, the SBA, the Chamber of Commerce, and the National Restaurant Association could organize a powerful lobbying group to advocate for a maximum wage law to enhance the profitability of America’s small businesses, restaurants and retailers, no?
Sounds crazy, right? Well, it actually happens all the time in many other ways – industry groups are always organizing and lobbying to use the political process to lower their costs or taxes, or receive taxpayer subsidies. For example:
Renewable energy firms seek taxpayer subsidies, favorable tax treatment, and loan guarantees to lower their costs.
The film industry lobbies for tax credits and film subsidies in states across the country to lower their production costs.
America’s chemical and steel companies are lobbying against US natural gas exports because they claim it would raise their energy costs.
Some of America’s gasoline refiners oppose crude oil exports because they say it will raise the costs of their main input.
The National Association of Realtors and the National Association of Home Builders aggressively protect tax deductions for homeowners, because those tax subsidies lower the cost of home ownership and help them sell more homes.
Many American businesses support the taxpayer-funded Export-Import Bank because it lowers their costs of selling products overseas.
So if it’s acceptable for US companies and industries to use the political process to lower their costs and taxes, why shouldn’t it be acceptable for them to advocate for a maximum wage legislation to lower their labor costs for unskilled workers? Should it only be acceptable for workers to advocate for higher wages, but not for employers to advocate for lower wages? That doesn’t seem fair and equitable.
For example, I’ve edited President Obama’s statement below advocating a $10.10 per hour minimum wage as an example of how support for a maximum wage of $5.05 per hour might be argued as a way to benefit the thousands of employers and small businesses who hire unskilled workers.
Weekly Address: Time to Lift Lower the Minimum Maximum Wage for Entry Level Workers and Give America’s Small Businesses, Restaurants and Retailers a Raise
In this week’s address, President Obama says this is a year of action, and he will do everything he can to restore opportunity for all, especially for America’s 25 million small business owners including restaurants and retailers. The President already lifted the wages for federal contract workers, and he calls on the American people to tell Congress to finish the job by boosting limit the federal minimum maximum wage for all unskilled, limited-experienced, entry-level workers to $10.10 $5.50 per hour and give small businesses, restaurants and retailers in America a raise.
Remarks of President Barack Obama
Weekly Address
The White House
February 22, 2014 (updated below to reflect the recent announcement that “The Gap” is closing 175 stores)Hi, everybody.
Restoring the idea of opportunity for all requires a year of action from all of us. Wherever I can act on my own, I will – and whenever I can ask more Americans to help, I’ll do that too.
In my State of the Union Address, for example, I asked more business leaders to take action to raise their employees’ wages and start more small businesses. Because even though our economy is growing, and our businesses have created about eight and a half million new jobs over the past four years, average wages have barely budged. for unskilled workers are so high that they are preventing new small businesses from emerging and existing ones from expanding.
So it’s good news that, To see what threatens America’s retailers and small businesses, consider that earlier this week last year, one of America’s largest retailers, The Gap, decided to raise wages for its employees beginning this year. Their decision will was an honorable, but misguided attempt to benefit about 65,000 workers in the U.S., That means mistakenly assuming that more families will be able to raise their kids, finish their studies, or keep up on their bills with a little less financial stress and strain.
Gap’s misguided CEO explained their faulty decision simply – he said, “It’s right for our brands, good for our people, and beneficial to our customers.” And he’s right – was wrong — raising Americans’ wages isn’t just a good deed; it’s not good business and it’s not good for our economy. It might helps reduce turnover temporarily, it might boosts productivity, and it might gives folks some more money to spend at local businesses in the short run. But now The Gap is experiencing financial stress partly from excessively high labor costs, and it will have to close 175 stores in North America and lay off thousands of workers – who now won’t have money to pay their bills, raise their families and finish their studies. That’s what can happen without a maximum wage to protect America’s retailers and small businesses from excessive competition for unskilled workers and greedy employees asking for higher wages. And a maximum wage law also helps to guarantee that workers won’t lose their jobs – like the thousands of now unemployed workers who lost their jobs at The Gap because of excessively high wages.
And as a chief executive myself, that’s why I took action last week to lift more workers’ wages by requiring federal contractors to pay their employees a fair wage of at least $10.10 an hour. I want to curb higher wages for unskilled, limited-experience workers with maximum wage legislation, and ensure that every unskilled worker who wants a job will find one.
In the year since I first asked Congress to raise lower the minimum maximum wage for limited-experience workers, six states have passed laws to raise lower theirs, and more states are working on it as we speak. But only Congress can finish the job and lift America’s ns’ wages small business and retailers across the country into greater profitability.
Right now, there’s a bill before Congress that would boost limit America’s minimum maximum wage to $10.10 $5.05 an hour for unskilled workers. That’s easy to remember – “ten-ten” “five-five.” That bill would lift wages increase profitability for more than 16 28 million Americans small businesses without requiring a single dollar in new taxes or spending. But even though a majority of Democrats, Independents, and Republicans across the country support raising lowering the minimum maximum wage, Republicans Democrats in Congress don’t want to give it a vote.
Hardworking business owners of American’s small businesses deserve better than “no.” Let’s tell Congress to say “yes.” Pass that bill. Give America’s small businesses, restaurants, non-profits and retailers a raise. Because here in America, no one small business owner who works hard should have to live in poverty because his or her wage costs are too high – and everyone entrepreneur who works hard, takes risks and hires unskilled workers should have a chance to get ahead.
Thanks, and have a great weekend.
Bottom Line: What seems to get lost in the minimum wage debate are the significant burdens imposed on America’s struggling small businesses when their labor costs for unskilled workers are increased by 40% or more – Obama totally ignored that issue in his original address. The benefits of “ten-ten” or $15 per hour for employees always get most of the attention by Obama and others, while the significant costs and financial burdens imposed on employers, restaurants, and small businesses are frequently ignored. To be consistent and fair, if it’s acceptable for workers to lobby for higher wages, and acceptable for businesses and industries to lobby for lower costs, taxpayer subsidies and lower taxes, then I say it should be acceptable for businesses to lobby for lower labor costs by advocating maximum wage legislation. I’m just asking for fairness.
OK, maybe I’m being a little facetious, but I’m just suggesting a more balanced debate about the minimum wage that considers both the benefits to unskilled workers and the costs to employers, so that we get both sides of the story! And if you don’t think that employers should use the coercive power of the government to pay below-market wages with a maximum wage law, why do you think that employees should use the coercive power of the government to force employers to pay above-market wages with minimum wage laws?
Comments welcome.
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