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Mandating a
"Living Wage" is
not the Solution

October 6, 2014

The President has unilaterally raised the minimum wage for all employees of government contractors to $10.10 per hour.  Doing so is within his authority.   Earlier this year the City of Seattle Washington raised their minimum wage rate to $15 an hour. Closer to home there was a forum held last week in Galveston on this very subject.    

Meanwhile conservatives are often vilified for resisting increases to the minimum wage.  Some people have said “Why not raise the wage rate, after all; if I'm not a business owner why wouldn’t I want businesses to be forced to pay a ‘living wage’?”

We believe that at the root of the argument for a “living wage” is a desire to be compassionate and fair.  As Christians, we too, believe being compassionate and fair is important.  But, as with many issues the devil is in the details! 

Two of us are, or have been, small businessmen.  We understand that in order to survive, we needed to offer goods/services at a price that people could afford.  This, in turn, required us to keep our expenses down.  Part of this is to pay those we employed according to their skill level.  If a person is a petrochemical engineer, he/she is going to be paid a different pay rate than a person who is a pipe fitter.  Both are important to the company and both should be compensated for their contribution but their wage rates would not necessarily be the same.

When the government forces compassion upon companies without a corresponding increase in productivity, the market place is disrupted and a vicious cycle ensues.  Businesses -- in particular small businesses -- find the cost of providing goods/services increase when minimum wages are instituted.  They respond by cutting the number of workers and increasing the responsibilities of the workers who remain or by increasing the price for their products.  As the costs of goods/services increase what was a “living wage” earlier is no longer a “living wage” and the cycle repeats itself. 

In the meantime, those who are less skilled or those just entering the job market find the number of opportunities available to them shrinking before their very eyes.  Add to the mix those who are in our country illegally who will work for cash at wages below the minimum wage and the competition for just being employed becomes even more difficult.

So what are the best options?  How do we solve this problem?  Should we be compassionate or hardnosed?  As is often the case, the appropriate answer is somewhere in the middle.

We would suggest that efforts should be made to help raise the skill level, and therefore the employability, of those who want to work and who are willing to apply -- advance -- themselves.  Local community colleges offer training in a host of fields for which there are job openings.  We should encourage such training programs.  But we would make these programs only available to those who are in our country legally.  

The goal here should be to raise the skill level of potential workers, thereby making them more employable and at a higher wage rate.  We should not be trying to reward those who do not want to apply themselves or who are in our country illegally; by having the government mandate an artificial minimum wage rate for all workers.  Mandating a “living wage” may make a great sound bite or political slogan but it is not the solution!  Raising the competency of our workforce is!

Bill, Mark and John

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

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