$15 Minimum Wage? More May Turn Out to Be Less

By Kathryn Hickok

CascadeNewLogoLast summer, Seattle passed an ordinance raising its minimum wage to $15 per hour. A Portland-area restaurant owner recently explained in The Oregonian how a $15-per-hour minimum wage here would spell lower total wages and less opportunity for his employees.

Lee Spectator wrote: “I start most of my new hires at minimum wage, then, based on their performance, give them a raise within their first 30 to 60 days. I give merit raises based on performance [and] annual performance reviews….With a $15 per hour minimum wage, that would go away. I would have no room to pay them any more, and they would have no incentive to work harder.”

With increased wage expenses also come higher taxes and workers-comp insurance. These would balloon to nearly 48 percent of Spectator’s total business expenses, he says.

So, what would be the likely result if Portland raised the minimum wage to $15 an hour? To start, fewer jobs will be available in small businesses that pay hourly. Fewer employers will want to hire low-skilled workers like teenagers, since they will need more productive and experienced workers to justify paying them a higher wage. Entry-level workers should have the chance to climb the ranks and achieve higher earnings as a consequence of their hard work, not to be stuck at one uniform pay grade or else have no job at all.

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

  • Bob Clark

    Spiking the minimum wage is non-common sense as it is fully contrary to the tried and true common sense guide: “There is no such thing as a free lunch.” Somehow we are to believe the wave of a legislative pin causes the value of a worker magically to jump with the spike? Surely, you gist.

    What spiking the minimum wage is really about is giving labor unions cause to threaten strikes to raise the wages of their rank and file, arguing pay scales need to be adjusted sharply up for members making well above the revised minimum wage. Labor unions have demonstrated very consistently they will gladly lose employment if only to gain sharply higher wages forcefully for those lucky enough to remain employed. Of course, ultimately their employer victims are forced either to speed automation (artificially forcing replacement of humans for machines) or to become uncompetitive and shrink in business size (eventually going out of business such as in the case of the Michigan state automobile industry bankruptcies).

    Besides this, it flies in the face of individual freedom. If I want to work for less than a stipulated pay, I should have this right. Maybe I am very frugal (or have other income…earned income tax credit, e.g) and love the long term or other benefits this job brings. Why should the government force itself into my free decision? After all, only just recently we saw what happens when the individual is repeatedly stepped on by an overbearing, regulatory government. The man who set himself on fire in Tunsia because he couldn’t get approval from an obstinate government, stopping him from continuing to sell his ordinary wares (think it was produce), comes to mind.

    • guest

      In and of themselves, COLA’s and spiking minimum wages are reactionary inflationary catalysts. Big government and its lard, butt appreciative as supplicants thrive on it. The rest of US taxpayers can ill afford it.

  • Justin Norton-Kertson

    Actually, Lee Spector’s article does not explain how a $15 minimum wage would mean total lower wages. He explained that he starts his employees out at $9,10 per hour and then gives them a couple very tiny raises. He explains that his employees top out at less than $15 per hour. Therefore, raising the minimum wage to $15 means more wages for all his employees. This isn’t journalism. More like corporate propaganda.

    • Dodged5

      It means more wages for all his employees that remain employed. It means no wages for yhose he lets go in order to pay higher wages to the remaining employees. He did not say that the raises he gave were “tiny” and he also did not say that they topped out at less than $15. He did say that he would have to hire only experienced people and that upward mobility would no longer be available. Read more carefully!

  • MrBill

    The question that seems to get lost in these kinds of discussions is what a given job is actually worth? That’s a question best answered by employees and employers in the context of the market as a whole.

    • Eric Blair

      Assuming, of course, that there is something of a parity of power exists between employer and employee.

      • MrBill

        Parity of power is irrelevant. Both need to operate within the constraints of the marketplace. Employers can’t offer $1/hr if the work is worth more. Employees can’t demand $15/hr if the work is worth less. It all boils down to supply and demand.

        • Eric Blair

          We are going to significantly disagree… parity of power is absolutely critical – if labor and management are going to bargain, they need to do so on roughly equal footing.

          Even more often, employees can’t demand more than $15/hr even if their labor is making the company, and majority shareholders, extremely wealthy. THAT boils down to disparity in economic power.

          • MrBill

            The hourly employee (whatever that hourly wage is) carries very little risk. If the company goes under, he/she goes on to another job. The “wealthy” shareholders are the ones who will lose their shirts if the company goes under. Insisting on some kind of parity between the two parties who are unequal based on the level of risk they assuming isn’t right either.

            If the employee wants parity, he/she should go out and buy stock and assume the same kind of risk the shareholder does. Then they can share in the profits or losses with all the other shareholders (wealthy or otherwise).

          • Eric Blair

            “The hourly employee (whatever that hourly wage is) carries very little
            risk. If the company goes under, he/she goes on to another job.”

            This is a rather large unproven assumption. Simply picking up a new job is not that easy, and in the case of an hourly employee, it can directly affect their ability to feed, clothe, and house their family. Usually an issue that isn’t faced by shareholders. That risk, I would argue, far outweighs the risks faced by shareholders.

          • Most businesses in Oregon are relatively small privately owned firms. The “wealthy” owners often risk everything, and if the business fails they too may have a hard time feeding, clothing and housing their families. Too often, they forgo their own paychecks to make sure their employees are paid.

          • Eric Blair

            I actually agree with you. I’ve always seen a difference between small, privately owned businesses, and larger corporations. There is a balancing act… we’ll just disagree with the balance point, and the method of balancing 😉

          • David from Mill City

            Steve you are right about this. The are being hurt by the same unbalanced playing field as their employees.

          • David, I didn’t make my comment to imply that small business owners are being hurt by an unbalanced playing field, but simply to recognize that they are taking great risks to achieve their dreams.

            Employees usually get their paycheck no matter that their employers make money or lose money, at least in the intermediate term. The reward for taking such risks can be great wealth, but it can also be total loss.

          • guest

            EB, seems your favorite whine moist bare a pinko blush in order to be totalitarian palatable, comrade. .

  • Eric Blair

    No actual data, and only one anecdote. Pretty thin gruel to feed such a big assumption.

    • gallled rush 39’r

      Eric Blair might appreciate supplanting his’ns as the principle name on Cesar Chavez Blvd.

  • David from Mill City

    I find it interesting that only workers are routinely expected to provide their services at less then cost. It is also significant that with the exception of employee wages businesses routinely pay what a supplier asks for its product or services. And that we have so many business plans that are predicated on worker and public subsidies to make a profit.

    If someone trying to get financing to start a trucking company provided the bank with a business plan that called for the firm to only pay $100 per new truck, because that is all they can afford to make a profit, they would be laughed out the door. Yet we have thousands of firms with business plans that depend on their employees to provide their services at below cost, or that their customers directly pay their employees through tips so they can make a profit.

    As to the argument that employee wages are based on “supply and demand” and on the workings of the “free market” if the playing field was level the might have merit. But as the playing field is anything but level, and the cries of “supply and demand” and “free market” are just a smoke screen, and a very poor one, to conceal the gross exploitation of the American work force by large multi-national corporations. An exploitation created and actively supported by the same government those employees support through their tax dollars.

    And in regards to the argument that businesses are paying what a job is worth to them, I offer the counter, just like a truck is worth what the maker charges for it, a job is worth $15 dollars a hour if that is what the minimum wage is. For when it is all said and done, you can’t sell a burger and fries, it there is no one to flip the burger, put the fries in the fryer or take the money from the customer.

  • Jack Lord God

    Nothing wrecks an economy more quickly than when those who have no experience, knowledge or inclination to run a business suddenly think they are more knowledgeable than those who do.

    When nitwits who have never signed the front of a paycheck suddenly think they have business acumen, hold on to your wallet. Such people are simple thieves disguising their theft as altruism. History is full of such trash.

    The next time you hear the phrase “I would gladly pay more if….” Ask that person “then why don’t you voluntarily pay more now”. You will find their caring extends only as far as the other persons wallet will take them.

    • Eric Blair

      “Nothing wrecks an economy more quickly than when those who have no
      experience, knowledge or inclination to run a business suddenly think
      they are more knowledgeable than those who do.

      I’m wondering about your source for this, and if there has ever been an example of an economy being wrecked in the way you’re describing.

      • David from Mill City

        The United States Economy since the 1980s. And the the people with out the experience, or knowledge to run an economy are the neo-con wing of the Republican Party.

        • Jack Lord God

          Sorry if you did poorly under Reagan or Clinton. that takes some mad skills. That would be why the majority of the rest of the world tried to emulate our economy during that time. Use your brain, not dopey Facebook memes. Works more better.

          • David from Mill City

            Yes the rest of the world copied us that’s why the rest of the world is in the same financial mess we are in.

            As to specifics as to how the neo-con wing of the Republican Party destroyed the United States economy:

            De-regulation of the Banking and Financial sector which got us the Saving and Loan crisis and the Great Recession.

            NAFTA , the WTO and similar “free” trade agreements which got us the loss of good family wage Middle Class jobs in the United States, and the destruction of Mexico’s rural farming economy resulting increased illegal immigration.

            Permitting including company stock as part of a CEO’s compensation which got us a disconnection between worker productivity and worker compensation.

            Tax cuts that helped bring us the Dot Com, Housing and other bubbles and accompanying crashes.

            Taking an economy were a single bread winner with one full time job could support a family and converting it to one where two full time jobs can barely support a family.

            The totally erroneous concept that the rich are the job creators, and not consumer demand, which is the true force behind job creation. And that it is the working and middle class workers are the consumers that create demand.

            Not recognizing that the Federal Government is the employer of last resort and that direct and indirect government hiring is the key to stimulating the economy out of a recession and not making the rich richer by cutting their taxes.

            Making it easier for corporations to avoid their contractual financial responsibilities (i.e. pensions and retiree health care) through bankruptcy while at the same time making it impossible to discharge school loan debt through bankruptcy.

            Not taking action to reduce the out sourcing of US middle-class jobs overseas.

            Running two major wars off the books and then complaining about an increased national debt.

            And yes, conservative Democrats also contributed greatly to many of these.

          • Eric Blair

            Weren’t you the one that mocked someone for their grammar not so long ago? And then you write things like, “Works more better”? LOL

        • Eric Blair

          You’ll have to excuse Jack. He has no sense of humor, and really can’t stand to be disagreed with. As you can see below, even politely questioning his assumptions makes him rage-post. I worry about his blood pressure sometimes.

      • Jack Lord God

        My source is my brain, I stated it as history has proven it true. If you cannot think of an example of this, I would advise you immediately give up your efforts here and run as fast as you can to the nearest grade school history class.

        • Eric Blair

          I didn’t think you had one.

          Keep in mind Jack, the snarkier you get, the more likely you are to embarrass yourself. THAT definitely has a history on here. 🙂

        • J.Q. Public

          If your source is your brain, it should be easy enough for you to access the information and share it with us.

          On the other hand, if you just pulled it out of your colon, then you likely will just try to get by with bluster.

          • Eric Blair

            Nailed it.

          • guest

            EB and JQ, both having wires crossed over indolent lines of ramification – perhaps, if both were administered a Sabath night bath, both souls might feel some respect and admiration for the Man in Charge overseeing them on Calvary Hill.