Slaying the liberals' myths about the minimum wage
Michael Saltsman is research director of the Employment Policies Institute, a Washington, D.C.-based nonprofit research organization dedicated to studying public policy issues surrounding employment growth. He spoke to the Trib regarding a U.S. Senate bill that would raise the federal minimum wage to $10.10 an hour.
Q: With the 75th anniversary of the law establishing a federal minimum wage having recently occurred, there are assertions again that it remains too low. How would you address that?
A: I think that the idea the minimum wage remains too low is built on the idea that it is intended to be, let's say, a living wage. I think that whole premise is flawed.
When we think about the minimum wage, we should think about it in terms of what it is today, which essentially is a wage that covers lots of jobs in the retail industry, in the service sector. These tend to be entry-level jobs.
So the minimum wage needs to be thought of as a wage that people start at and work their way up from. A study from a couple of economists found that the typical minimum wage earner gets a raise in the first one to 12 months on the job. So when we talk about the minimum wage, I think that's the context we need to think about it in.
Q: There always have been contentions that job losses result when the minimum wage goes up, and Sen. (Tom) Harkin, D-Iowa, recently claimed such losses are a myth. What do you think of that comment?
A: Economists have been studying the minimum wage since probably the late 1940s. In 1977, Congress created something called the Minimum Wage Study Commission to basically look at all this research and study the question.
Their report established that if you raise the minimum wage, you are going to reduce employment for young people by anywhere from 1 to 3 percent. A more recent study of all of the studies from the last 20 years written by a couple of economists at (the University of California, Irvine) and the Federal Reserve Board — they looked at over 100 studies and they found that about 85 percent of the most credible stories point to job loss following a minimum wage increase.
There are consequences to raising the minimum wage and they tend to fall on the least-skilled employees. Any serious sort of credible discussion about the minimum wage has to acknowledge that.
It is true that there are a handful of outliers out there and I think people like Senator Harkin who are trying to make an ideological case are going to latch on to them. But the idea that (job losses) are a myth is refuted by the economic research.
Q: In your estimation, what would be the best approach to take with the minimum wage?
A: I think the best approach would be to freeze it at its current level. I think the minimum wage would do what it always does, which is essentially become less and less relevant as more and more people work their way up the job ladder.
(I believe) what economists have been saying — which is people aren't stuck at the minimum wage. People are going to get that job and then they are going to work their way up to another job, a better job. But they can't get that next job if they don't have experience and they can't get the experience if they don't have the job to begin with.
Eric Heyl is a staff writer for Trib Total Media (412-320-7857 or email@example.com).