A Conservative Argument For A Balanced & Effective Minimum Wage
As the conversation about both the national and state wide minimum wage has unfolded over the last couple of years, labor and business have kept a close eye on government proposed action and have issued rhetoric supporting their chosen positions. Generally speaking, labor wants it raised and business wants it kept the same (or raised very little). Both sides have presented their points of view, and now our state legislature may be the focal point of this discussion (as it relates to Oregon) when it convenes from February 1st – March 5th. There are already many ‘hot button’ issues on the legislative docket this year, so the debate on raising the Oregon minimum wage may end up being referred to the voters. If this is the case, what factors should our members take into consideration as they follow this very important issue?
First, our economy is still very much in flux and has forced many Americans to struggle to make ends meet. As our politicians try to find the correct concoction of policies to help revive economic growth, many workers plunge deeper into debt and despair. One stark measure of our continued economic downturn is the national median household income has continued to decline since the 2008 recession. To make matters worse, the last peak of this measure was in 1999 – so workers making the minimum have been forced to keep afloat with less.
Second, let the raw numbers do the talking. The current poverty guideline (according to the US Department of Health and Human Services) is:
|Persons in family/household||Poverty guideline|
Now calculate the annual salary based on both the federal and Oregon minimum wage (assuming a 40 hour work week, around 2,000 hours per year).
The federal minimum wage is currently $7.25, so annual salary would be approximately $14,500. If this person were to get two paid weeks of vacation per year (or took no vacation the whole year) then they would make about $15,080. This means a single parent with one child would be considered in poverty under the guideline by $850. A single parent with two children would in poverty under the guideline by $5,010.
The Oregon minimum wage currently is $9.25, so annual salary would be approximately $18,500. If this person were to get two paid weeks of vacation per year (or took no vacation the whole year) then they would make about $19,240. The Oregon worker is a little better off than the federal worker, a single parent with one child is well over the poverty guideline. However, a single parent with two children would still be in poverty under the guideline by $850.
If we cite federal census data (which uses slightly different numbers, referred to as ‘thresholds’ as they are easier to use to calculate statistics), the poverty rate in the United States is around 14.8% (or 46.7 million people). The national poverty rate for children under the age of 18 is 21.1%. The last census count for the population of Oregon is 3.97 million people, the percent of Oregonians living in poverty is approximately 16.2%.
Third – I’ve been using the term ‘minimum wage’ to describe the minimum amount employees can legally be paid. This number is used to generate an annual household income and is compared to the federal poverty guideline – but this isn’t the end of the story. If taken strictly at face value, the poverty threshold is the income necessary for a household to be able to consume a low cost, nutritious diet and purchase non-food necessities (to include shelter and clothing). A person making the minimum wage (assuming no children, thus able to keep over the poverty threshold) is still more than likely (if not assured) to be reliant on the government for means tested entitlements.
Taking these three concepts into account (declining household income, making minimum wage with at least one dependant child equates to poverty, impoverished families reliance on government entitlements) an argument exists for raising the minimum wage. As compassionate conservatives, we do have prior examples of conservative leaders who fought for a fair and just minimum wage. During the course of research for this article, Winston Churchill was found to say:
“It is a serious national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions. It was formerly supposed that the working of the laws of supply and demand would naturally regulate or eliminate that evil […and…] ultimately produce a fair price. Where… you have a powerful organisation on both sides… there you have a healthy bargaining…. But where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer is undercut by the worst…. where those conditions prevail you have not a condition of progress, but a condition of progressive degeneration.”
This really is a fascinating quote as Mr. Churchill makes the argument for a fair minimum wage and the use of equitable bargaining power for both labor and business. Bottom line, the debate over raising or setting a fair minimum wage is not exclusive to liberals or progressives.
An important concept to take into consideration when calculating the minimum wage is a ‘living wage‘. A living wage expands upon the minimum wage by including utilities, transportation, health care, child care. Progressives tend to cite the living wage number (which can vary based on other possible “needs” they include in the calculation) when defining what they consider to be a fair minimum wage. A vocal group heavily lobbying our state legislature right now calls for a $15 per hour minimum wage. They list several “basic facts” to support their stance that Oregon should standardize on a $15 per hour minimum wage.
Digging into the argument for this drastic increase, we have to review the claim made about $15/hour being the “baseline for a living wage that allows hard working Oregonians the dignity of feeding and housing their families without government help”. The study cited is by the Alliance for a Just Society, and has been used by many progressive groups as the basis for a $15 minimum wage. Unfortunately the study itself is vague on the specific numbers used to arrive at $15 per hour (found on page 37). Generally speaking, this study (and others) mask how to arrive at a $15 per hour number and instead focus on other ancillary statistics that can generally be explained by economic stagnation or state by state legislative policies effecting individual economic outlooks. For example (though not in scope for this article), Oregon’s current housing market situation (particularly in how it relates to renters) can throw off any meaningful living or minimum wage calculation if not averaged over time (and the whole state, instead of just Portland).
So where should conservatives stand on what is a fair minimum (or living) wage? If we just take into account the poverty rate against our state minimum wage listed above, there is a worthy argument about a raise. However recent studies where the minimum wage was raised above $10 per hour show a worrying trend of economic uncertainty. The numbers provided by the studies of $15 per hour supporters don’t provide enough detail, but not changing it puts those making the minimum either very close to or under the poverty guideline (especially single parents or families with single wage earners). Well, it just so happens that a group of around 600 economists recently wrote a letter to the US Congress and the President arguing for a federal minimum wage increase to $10.10/hour by 2016. This would equate to roughly $20,200 annually or $21,000 with two weeks paid vacation (or none taken). In the context of the federal poverty guideline, this would allow a single parent to be over the guideline with two children. It would still be a raise if implemented in Oregon, but well short of the $15 per hour lobbyists or the governor’s plan of $15 in Portland, $13.50 everywhere else. Suffice to say, there is still quite a bit of division on this subject and it does not look to end based on the governor’s input.
In conclusion and moving forward, one should think about what works best to assist minimum wage earners out of economic uncertainty. Just raising the rate of minimum wage (based on the cost of living or otherwise) isn’t enough, these workers need opportunities to propel themselves to economic prosperity. Looking through the federal census data cited earlier, an answer may be looming. The report states that in the context of economic well being, “households with householders who had lower levels of education were more likely to remain in or move into a lower [income] quantile than households whose house holders had higher levels of education.” Education levels are also shown to be a major contributing factor for the percentage of people who participate in means tested entitlements. Allowing workers to better themselves with more or higher education is something both labor and business should integrate into employee achievement programs. Starbucks was able to do it by collaborating with Arizona State University, Oregon labor and business should be able to do it with our state, local or community colleges.
The current Oregon economic forecast is on an upswing, a balanced raise of the minimum wage paired with implementation of programs to further worker education will produce a more effective workforce. To those who are hung up on just adjusting the minimum wage outright, Henry Ford said it best – “It’s not the employer who pays the wages. Employers only handle the money. It’s the customer who pays the wages.” For those of us who work in the government, it should be our duty to take this to heart as it is the public who ‘pays our wages’ for the services we provide.
After meeting with interests from both sides of this issue, the governor has scaled back her proposed minimum wage increases to $14.50 in Portland and $13.25 everywhere else. These amounts are still very aggressive when compared to national levels, but were likely changed with the hope that the new proposal will pass through the Oregon legislature this session. Our members are encouraged to follow the 2016 legislative session as the minimum wage proposal and other very important topics are discussed.