California, tied for fourth

As reported locally, California State Senator Abel Maldonado of Santa Maria has submitted a bill that raises California's minimum wage from $6.75/hr to $7.25 later this year, and another .50 cents next year. The bill it seems--in an unsurprising turn of events--enjoys the support of Governor Schwarzenegger as well (but that's a whole other story).

So why am I not jumping up and down at the prospect of better wages for low-income Californians? Let the businessmen explain:

Opinions vary on what impact a raise in the minimum wage could have on local businesses.

“It is kind of an interesting dilemma, because how can you be against people getting more money?” said Kirk Spry, chief executive officer of VTC Enterprises.

“But in our business of getting people jobs ... our history is, one of the first things businesses will do is cut back. Entry-level positions that we might be able to place people into might be cut. It makes our job of placing people more difficult because there are less jobs.

“If the minimum wage goes up, businesses' labor costs go up and ... they may respond by cutting back on labor. That is a concern I have about raising the minimum wage. That can and does happen historically.”

Spry's concerns mirror those of another local businessman, George J. Majoue: “It would have a big impact on my business. We try to keep our prices very reasonable for our guests,” Majoue said.

“If we have to raise the minimum wage, I don't know what impact this would have on the price. I would assume that if a minimum wage increase is approved, we would possibly look at raising our prices. And I think many businesses are going to be the same way - especially if they employ several people.”

In addition to the hourly wage increase, workers' compensation insurance and benefit costs would increase, he said.

“I can't see how - if we are going to continue to provide the service we do - we could cut the staff,” Majoue said. “Outstanding service is really paramount to what we do. We can't cut employee numbers and maintain service.”

But he is divided.

“I think people deserve a fair wage and the cost of living is extremely high in California,” Majoue said.

“To survive here people need more money. But how do you do that without jeopardizing the cost of services (businesses provide)?

Too often this question of what is a reasonable wage devolves into debates over who hates business vs. who hates poor people; a discussion that serves no one.

The real question is why have minimum-wage jobs become "bread-winning" jobs? As a kid I don't ever recall regularly seeing adults working fast-food counters (aside from the obvious--as store managers/asst. managers). These entry-level jobs were held by other teenagers as first-jobs, things designed to pay for gas and some funny money.

By their very nature, such employment isn't meant to feed and clothe a person, much less a family. Yet in some cases, people attempt it out of necessity.

Why then do people depend on these un-skilled low-paying jobs for their livelihood and how do we move them into work that better meets their needs? As to the answer, I think the The Washington Examiner gets it right, as far as that example can be applied here. You don't help people by destroying job opportunities.

Anybody with a semester of macro-economics can graph the results of a minimum-wage increase and the decrease in jobs it leads to. No one is served when you force employers to choose between fewer employees and higher wages.