Fast-food workers staged a series of nationwide protests just as the country prepared to celebrate Labor Day, which may be coincidental but does bring an interesting perspective to the holiday that honors the nation's workforce.
Americans typically have embraced the concept of offering a fair wage for an honest day's work, but seldom have agreed on exactly what that means. And unskilled workers often have argued for higher wages without fully appreciating what a government-imposed pay increase would mean to their employer's bottom line.
The question for many is whether the minimum wage is fair. In terms of relative buying power, it's certainly not as generous as it has been. Adjusted for inflation, the wage is only 66 percent of what it was in real dollars in 1968. But fair?
When viewed in terms of who earns this wage, the issue changes considerably. The U.S. Department of Labor reported that 4.7 percent of the nation's workers made minimum wage or less (the wage law doesn't apply to all businesses) in 2012. Of those, more than half were 25 or younger. Many of these work in food services where tips and other enhancements add to their pay.
And those young workers live in families where the average income is more than $50,000 per year, according to government statistics. For many, minimum wage jobs are their introduction to the working world during summers or while going to school.
Those protesting are demanding the federal minimum wage grow from $7.25 an hour to $15. President Obama has proposed raising it to $9 an hour. The president's opponent in his re-election campaign, Mitt Romney, said he would support having the wage keep pace with inflation. Had we done that, the wage would now be about $11 an hour. Congress, which can't seem to agree on any economic issue, is in no danger of acting on this any time soon.
The issue has become a political football in a scrimmage between those who believe the free market should dictate wages and those who believe there are societal benefits to making sure workers at least can afford basic necessities.
There is a wealth of data that is being used on both sides to suggest raising the wage either hurts the economy or helps it. But were the wage to rise as dramatically as protesters demand, the effect would be immediate and dramatic, and not in the ways they intend. Either the price of fast food would rise substantially, or restaurants would find ways to cut costs through automation or other means. Many of today's minimum-wage workers likely would find themselves unemployed. Young people would miss out on valuable work experience.44 comments on this story
The free market rewards workers who obtain skills, which is a strong incentive toward education and training. That may seem cruel for those who, for various reasons, are forced into minimum-wage jobs, but government-imposed wage levels lead to unintended consequences.
James Sherk, a policy analyst for the Heritage Foundation, wrote that even among older minimum-wage workers, three-fourths live in households above the poverty line. Less than 25 percent of them live in poverty.
That doesn't mean the plight of those few people should be ignored. But raising the minimum wage is not a tool for reducing poverty.
More could be done to help truly needy low-wage earners learn skills and find pathways toward prosperity. Because the value of a dollar is a moving target, those who are without skills will always struggle, regardless of where government decides to place the minimum.