Low-income workers become collateral damage in minimum wage fight

Florida‘s minimum wage workers could soon get a raise, even if it costs many of them their jobs.

As plans to increase the minimum wage to more than $10 an hour gains political momentum, Florida’s lowest-income workers, as well as many unemployed workers looking for jobs, could soon suffer the ill effects of the well-intentioned employer mandate, several experts say.

“I normally support a strong minimum wage because I believe in social justice, but right now it’s a bad idea to increase it because the results would be counter productive,” Gerardo Martinez-Solanas, director of the South Florida nonprofit Democracia Participativa, told Watchdog.org.

“We are, in a way, still in a recession,” said Martinez-Solanas, a 35-year United Nations veteran. “We have high unemployment and low labor participation, and a higher minimum wage will only make it more difficult for young people, unqualified and unskilled workers to find jobs.”

Randall Holcombe, an economist at Florida State University, has similar concerns.

“I often hear advocates of a higher minimum wage say employers can afford to pay their workers more, but this ignores the decisions employers make in the hiring decision,” he said.

“An employer will hire an employee only if the employee returns more in value to the employer than it costs the employer to make the hire. Raising the minimum wage will price low-skilled workers, who are most in need work, out of jobs,” Holcombe said.

In an email, Holcombe referred to businesses like Walmart that have begun using automated check-out lines to replace cashiers, and restaurants that have replaced staff with touch-screen computers as a way to keep up with increasing costs.

“We have to ask ourselves whether low-skilled workers would be better off with a low-wage job or no job at all,” he said.

Florida’s minimum wage of $7.93 an hour outpaces most other states at 68 cents above the federal rate. It also automatically increases every year to reflect the cost of living.

In December, President Obama threw his weight behind a proposal to raise the federal minimum wage to $10.10 an hour as a focal point in his renewed inequality agenda.

“The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American dream, our way of life and what we stand for around the globe,” Obama said.

Two bills have been filed in the Florida Legislature to accomplish the same goal. State Sen. Dwight Bullard, D-Miami, and state Rep. Cynthia Stafford, D-Miami, are each sponsoring legislation designed to institute $10.10 an hour at the state level.

Increasing the minimum wage also polls well. Prior to the president’s endorsement, Gallup found three out of four Americans would vote to increase hourly base pay to at least $9 an hour.

“Immigrants typically work for much lower wages than other workers,” he said. “It’s not that business owners are out to hurt illegals, but if you make it more expensive for them to hire people it’s only logical that they’ll use immigrants more as a way of dealing with the economic situation.”

While $10.10 an hour is hardly a wealth-building wage, at about $21,000 a year, many Floridians would still get the government subsidized health care and food assistance they receive at $7.93 an hour, depending on individual eligibility requirements.

The uncertainty, partly political in nature, along with changes stemming from the Affordable Care Act, led a majority of respondents in the latest National Federation of Independent Business index to conclude that now is not “a good time to expand substantially.”

That’s bad news for those that want to work, contends Matinez-Solanas.

“The only way the government can help low-income workers is by creating policies that support businesses, especially new businesses,” he said.

Contact William Patrick at wpatrick@watchdog.org

Published with permission from Watchdog.org


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