In Tuesday’s State of the Union address, Obama proposed raising the national hourly minimum wage from $7.25 to $9 by the end of 2015. The current rate has been in place since 2009.
Obama’s wage increase initiative was cast as a way to compensate employees at the lowest end of the spectrum for the increasing workloads they’ve had to carry in recent years and to better close the income gap between those at the top and bottom ends of the spectrum. Though some might see this as a trickle-down strategy for those employees, many employers are bound to see it as a trickle-up maneuver that will negatively impact their small businesses by reducing the number of people they can afford to hire. In addition, consumers will inevitably pay for the wage hike with higher prices.
While the president contends putting more money in the pockets of minimum wage employees means more money being spent to fuel the economy, he isn’t taking into consideration that increasing wages at already struggling small businesses doesn’t automatically yield more money into merchants’ cash registers — but it does mean their expenses will rise. And if minimum wages rise, then wages for those earning above minimum wage would be forced to increase too. Rising expenses without a requisite rise in income means employers will have fewer rather than more people on their payrolls.
Perhaps state Rep. Kevin Brady, R-Texas, said it best: “Our goal shouldn’t be to raise the minimum wage. It should be to get people off it.”
Minimum wage exists for entry-level employees, which often includes high school students who are doing just fine at minimum wage. The market dictates wages, and those at the minimum-wage level typically have a skillset that doesn’t warrant much more than that level of income. If businesses need to pay more to get the employees they want, then they will do so without pressure from the president or anyone else.
The quickest way for those at the lowest end of the pay scale to improve their wage situation is for them to improve their skillset and job performance so they are justifiably paid more than the mandated minimum wage.
— Jeanny Sharp,
editor and publisher