Minimum Wage Debate Directs Focus Away from Job Creation and Growth

The Oregonian recently published an editorial on minimum wage summing up with, “So maybe it would be good if the minimum wage debate brings more attention to Oregon. What policy-makers would see is if they want to make real progress on reducing poverty, restoring the middle class and energizing the economy, the minimum wage is little more than a political diversion.”

While there is a lot of rhetoric on both sides of the minimum wage debate, raising the minimum wage actually gives little buying power. It creates a reduction in hours among lower skilled workers, and the products and services they use increase in cost. And, Oregon remains above the national average in unemployment.

The Oregonian editorial also stated, “It’s equally hard to argue that the minimum wage has made much of a dent in poverty. And it clearly hasn’t done much to boost the state’s per capita or median household incomes, both of which lag the nation.”

The insight of The Oregonian that “the minimum wage is little more than a political diversion” is a longstanding tactic of the unions. Before the 1996 minimum wage increase was on the ballot, the Oregon AFL-CIO put out a request for proposal on August 7, 1995 and the reason for the RFP stated, “In order to combat this hostile electoral and legislative climate, our campaign will … force our opponents to expend significant resources fighting labor-backed initiatives that will benefit working people.”

We have clearly seen that the government employees benefit packages have been costing the State billions of dollars – that’s billions with a B – in unfunded liabilities, so the unions indeed need a diversion.

If the backers of higher minimum wages wanted to direct help to people living solely on minimum wage, they would address it through the legislative process and try to reach meaningful compromise. There are provisions in the Federal Fair Labor Standards Act, and in 40-some states that would help businesses manage their hours as it relates to tipped employees and minors entering the work force.

Most people listed as minimum wage workers in Oregon are either tipped employees making and reporting over $20 an hour in combined income, or minors who live with their parents and are gaining much-needed work experience. In Oregon we have one of the highest unemployment rates in the country, and the unemployment rate for minors is even higher.

But the unions’ outrageous benefit packages and threats of strikes are creating problems in schools and local economies, and the public is becoming frustrated with the escalating costs. So when the unions need a political diversion, minimum wage is their old go-to topic.

It creates management concerns with payroll, employee hours and price increases, but the public stops talking about the real issues. Organized labor has not been able to deal with private sector issues, so union growth has primarily been in the government sector. Unions and policymakers that spend time on minimum wage are continuing down a path of lost focus and lost hours.

If the unions concentrated on matters that grew the economy, all citizens would benefit. Minimum wage workers do not join unions; they are primarily young, inexperienced individuals just entering the workforce. Income growth will come from manufacturing jobs and higher-skilled workers, and those people are the ones that join unions. We all need to focus on job creation and income growth, and not merely the same old “political diversion.” | Bill Perry, VP of Government Affairs, ORLA