Real pay hikes vs. government-imposed pay hikes

by Paul Mirengoff
Because the minimum wage hasn’t been raised since 2009, liberals like Sen. Tom Harkin argue that “millions of American workers have been without a raise” for almost five years. It’s natural for statists like Harkin to confuse the absence of a government-ordered raise with the absence of any raise. But in reality, according to James Sherk of the Heritage Foundation, two-thirds of minimum-wage workers make above the minimum wage a year later.
This fact should come as no surprise. As Sherk explains:

Most minimum-wage jobs are entry-level positions. They teach unskilled and inexperienced workers basic employment skills. Without these skills, they cannot qualify for higher-paying jobs. As they acquire these skills, they become more productive and can command higher pay.

Raising the minimum wage appreciably would upset this dynamic to the detriment of those the law is intended to help. According to Sherk, over a five-year period, a 10 percent increase in the minimum wage reduces total employment by 1.2 percent.

With fewer entry-level jobs available, it would be more difficult for less-skilled potential workers (the majority of minimum wage earners are between the ages of 16 and 24) to gain the traits necessary to move up. These traits include proven dependability, willingness to accept direction from a supervisor, and ability to work constructively with coworkers and customers.

And, of course, pay raises for minimum-wage workers will be fewer and smaller if the government pushes their wage well beyond what the employer normally would be willing to pay. Workers would tend not to be rewarded for good performance. The traditional lessons learned by new entrants to the work force — work hard, be respectful, and move up — would be undercut.

Sherk points out that 55 percent of American workers began their careers making within a dollar of the minimum wage. Most quickly move up from there. As noted, two-thirds receive a raise within a year. The median raise is 24 percent. For those at the 75th percentile, the raise is 66 percent.

In other words, minimum wage workers who prove to be decent employees don’t need Congress to give them a raise. For the remainder, it will be struggle enough for them to keep their jobs without Congress making their employment more expensive for the employer.

 

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