Economy: Higher Minimum Wage Means More Jobs

by Judy Ferro

True or False: Increasing the minimum wage destroys jobs.

If you answered false, you have 600 economists agreeing with you.  That many joined in signing a letter saying it isn’t so and advising the Federal government to increase the minimum wage.

About 17 states have banked on the economists being right and have adopted higher minimum wages.  The Center for Economic and Policy Research studied the 13 states who raised the minimum wage in January 2014 and found each had higher employment growth.  Some of the highest growth was in Massachusetts, Vermont, Hawaii, Maryland, and Connecticut—all of which are phasing in increases putting their minimum wages over $10 an hour.

Washington State’s job growth has been above average for years as its minimum wage increased with the cost of living.  Last year the State had the nation’s highest increase in small business jobs.  That’s right.  Small businesses there are thriving even though they have to pay employees more.

Some argue that increasing the minimum wage makes it harder for teenagers to get a job.  Actually, that’s probably true for teenagers in our neighboring states who have to compete with all the Idahoans crossing the border to work. Montana’s minimum wage is $7.80; Nevada’s, $8.25; Oregon’s, $9.10; and Washington’s, $9.32.

Idaho, however, has long “protected” teen employment by allowing a lower minimum wage for them.  Right now, employers can pay those under 20 as little as $4.25 an hour during their first 90 days of employment.  There is no minimum wage for those under 16 who work part-time. Others that employers don’t have to pay $7.25 an hour include outside sales people, some farm workers, and some seasonal employees.

Restaurant wait persons receive just $3.35 an hour though the fine print says the employer has to pay more if tips don’t bring the wage to $7.25.

The proposed Idaho law would raise wages to $8.25 later this year and $9.25 in 2016.  An increase in 2017 would be based on the change in the consumer price index.

A higher wage not only means more money circulating in the community, it usually leads to less turnover and better morale.  That’s a great combination for business.  You have heard that Wal-Mart plans to raise the wages of 47% of their employees to $9 or more an hour this year?  Could they have noticed all the how great Costco and Winco are doing while paying good wages?  Gap and Ikea have raised starting wages; T.J. Maxx plans to follow suit.

Of course, it is not just minimum wage that needs raised in Idaho.  News last week indicated that our neighboring state to the southeast will be hiring a lot more engineers.  According to the Utah Technology Council, a survey of just 40 high tech companies showed “an immediate need” for 500 engineers. “By next year, those same 40 companies anticipate nearly 2,000 job openings.”

And our northwest neighbor is desperate for teachers.  Washington has instituted full-day kindergarten, smaller class sizes through the third grade, and new graduation requirements in science, world languages, and social studies.  The Spokane District alone plans on hiring 300 new teachers by next fall.

Can raising the minimum wage help us raise teacher salaries?  It should.  First, Idaho wouldn’t have to pay as much for various aid programs and for earned income tax credits.  Second, tax revenues should grow as the economy expands.

A higher minimum wage would even help more students graduate from college and keep Utah from draining all our engineers.

 

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