Wichita Eagle, 23 Decemebr 2007
The Kansas minimum wage is $2.65 an hour. Do we have your attention?
To any rational thinker, this figure would appear absurd, almost silly. But nothing is funny about trying to get by on $2.65 an hour: For a full-time worker, that amounts to just $5,512 per year. Some people think that no one in Kansas could possibly make such a low hourly wage, but a new study sheds some light on this seemingly invisible category of workers.
The nonpartisan Ad Astra Institute, based in Lawrence, reports that 17,000 Kansas workers made less than the old $5.15 minimum wage in 2006. Since the federal minimum wage increased in July to $5.85, Kansans are falling even further behind, and that 17,000 figure is now higher.
To be clear: The Kansas minimum wage applies to workers in job categories not protected by the federal minimum, such as child care workers, companions to the elderly and infirm, and employees of private businesses grossing less than $500,000 per year and not engaged in interstate commerce.
As members of the Kansas Action Network's Raise the Wage Wichita campaign, we believe that an honest day's work deserves fair pay. A job should keep you out of poverty, not keep you in it.
But there's good news for businesses and the local economy, too.
To remain competitive, businesses need not choose between paying higher wages and keeping costs down. The study found that a minimum-wage increase "would have no substantial long-term effects on output, employment or profits." Further, it found that "short-run adjustments in prices, made by businesses reliant on low-wage workers, are likely to be much too small to have significant impacts on the overall price levels, and will not cause an ongoing inflationary spiral."
It makes sense that paying higher wages enables a more productive work force, increased consumer purchasing power, higher sales tax revenue and less turnover (an expensive cost for businesses). Perhaps more important, higher wages mean greater dignity for the lowest-paid workers in the Kansas economy.
Therefore, we urge the Wichita City Council to establish a citywide minimum wage that at least matches the federal wage level. Wichita can and must ensure that it pays to live and work in our city. As the rest of the state remains bogged down by an outdated $2.65 minimum wage, Wichita should take the moral and economic high road, ensuring that none of its workers slips through the cracks, that fairness and reason prevail.
If you know someone who is covered by the Kansas minimum-wage law -- or if you are that person -- we encourage you to join our campaign.
For more information, visit the Web site www.raisethewagekansas.org or call 316-941-4061.
The Rev. David Hansen of Wichita is conference minister for the Kansas-Oklahoma Conference, United Church of Christ. Kirby Clark is business manager for the Sheet Metal Workers International Association, Local 29, in Wichita.
The great appeal of a higher minimum wage mandated by an act of the legislature is that it seems like a wonderfully magical way to increase the wellbeing of low-wage workers. Those who were earning less than the new lawful wage and keep their jobs after the increase are happy. They are grateful to the lawmakers, labor leaders, newspaper editorialists, and others who pleaded for the higher minimum wage. News stories will report their good fortune.
ReplyDeleteThat's the visible effect of raising the minimum wage. But to understand the entire issue, we must look for the unseen effects.
The not-so-visible effect of the higher wage law is that demand for labor will be reduced. Those workers whose productivity, as measured by the give and take of supply and demand, lies below the new lawful wage rate are in danger of losing their jobs. The minimum wage law says if you hire someone you must pay them a certain amount. The law can't compel you to hire someone, nor can it compel employers to keep workers on the payroll.
The difficulty is that people with lose their jobs in dribs and drabs. A few workers here; a few there. They may not know who is to blame. The newspaper and television reporters will not seek these people, as they are largely invisible, especially so in the case of the people who are not hired because of the higher wage law.
If we are truly concerned about the plight of low-wage workers we can face some harsh realities and deal with them openly. The simple fact is that some people are not able to produce output that our economy values very much. They are not very productive. Passing a law that requires employers to pay them more doesn't change the fact that their productivity is low. But there are ways to increase productivity.
One way to increase workers' productivity is through education. Unfortunately, there is ample evidence that our public education system is failing badly.
Capital -- another way to increase wages -- may be a dirty word to some. But as the economist Walter E. Williams says, ask yourself this question: who earns the higher wage: a man digging a ditch with a shovel, or a man digging a ditch using a power backhoe? The difference between the two is that the man with the backhoe is more productive. That productivity is provided by capital -- the savings that someone accumulated (instead of spending on immediate consumption or taxes) and invested in a piece of equipment that increased the output of workers and our economy.
Education and capital accumulation are the two best ways to increase the productivity and the wages of workers. Ironically, the people who are most vocal about raising wages through legislative fiat are also usually opposed to meaningful education reform and school choice, insisting on more resources being poured into the present system. They also usually support higher taxes on both individuals and business, which makes it harder to accumulate capital. These organizations should examine the effects of the policies they promote, as they are not in alignment with their stated goals.