Bottom Line

The robots are coming
August 7, 2015

The robots are coming

Glenn Hamer

August 7, 2015

The idea of a $15 minimum wage is a full frontal assault on the free market, entry-level workers and small  business. Unfortunately, this terrible idea may be coming to an Arizona town near you. 

State Attorney General Mark Brnovich last month reached an agreement with an outfit called the Flagstaff Living Wage Coalition over an interpretation of a 2006 ballot measure, saying that cities in Arizona have the ability to craft their own minimum wage laws at rates above that of the state's. 

This is a rolling economic disaster that essentially sets wage controls. Nationally, only about 2 percent of jobs are at the minimum wage level. But if we take the minimum wage to $15, it would encompass 40 percent of the nation’s jobs.

Anyone concerned about the fate of our economy should vigorously oppose such a dramatic mandated wage spike, which would only make worse our rotten labor participation rate that currently sits at a level not seen since the Jimmy Carter years. We should not be looking for economic policy ideas out of the playbook of self-proclaimed socialist Bernie Sanders and many labor unions.

If Arizona cities institute their own higher minimum wages, they will make the harmful effects of our state’s minimum wage law with its automatic annual escalator even worse, harming cities’ ability to attract job creators, while hurting the very individuals they claim to want to help, especially young people and the unemployed.

After failure to make progress in Congress at the federal level - despite President Obama championing a minimum wage hike (and raising minimum wage for contractors via Executive Order) - activists have taken their agenda to the state and local level. In cities like Seattle, San Francisco and Los Angeles, the minimum wage is now on its way to $15. Here in Arizona, Flagstaff activists, fresh off their agreement with the attorney general, are in the planning stages to mount an effort to boost the minimum wage in that city, and there are rumblings of similar efforts in other Arizona municipalities.

A leader of the Flagstaff effort told the Arizona Daily Sun that raising the minimum wage would lead to everything from less poverty, to less child hunger, better health outcomes and fewer instances of domestic violence.

He is economically illiterate. The folks in the living wage crowd should consider the negative consequences that would come with a new wage mandate.

Mandated minimum wages far above those of the state and federal government make it more difficult and more expensive to do business within a city’s borders, especially for businesses with multiple locations in multiple jurisdictions that will have to calibrate their operations from zip code to zip code.

How will businesses facing a new higher minimum wage compensate for the increased costs? The options aren’t good. Businesses could cut the hours of existing employees, raise prices, institute hiring freezes, invest in automation like robots that will make employees unnecessary, or even close up shop. Small businesses in the Bay Area and Seattle have already faced that fate. No one can argue that those now making $0 an hour due to the new wage law are better off.

And for those on the outside of the job market looking in, like teenagers, the news is even worse. According to the Wall Street Journal, each 10 percent hike in the minimum wage causes a 1-2 percent drop in youth employment. Proving that the minimum wage destroys opportunity, teenage unemployment is a whopping 18 percent right now. Higher minimum wages make their ability to break into the job market even more difficult. Even the most altruistic employers have a hard time justifying paying a high school kid with few skills the full time equivalent of over $30,000 annually.

Most disturbing in the minimum wage debate, however, has been the undercurrent of disdain for honest work. Entitled activists who claim to be champions of the poor use rhetoric that demeans entry-level work and portrays employers as villains. They villify corporations on the Fortune 500, saying that surely big companies can afford a higher minimum wage, yet fail to acknowledge that mom and pop have to contend with these new mandates too. They depict positions that pay the minimum wage as lifelong slogs, not the first step on the road to upward mobility and maybe even a career.

I started out my work life as the assistant bun guy at Burger King. I earned a hair above minimum wage. I did not get rich. But I learned valuable life skills like the importance of showing up on time, getting a job done right, treating supervisors and my fellow employees with respect, and how to interact with customers.

The lessons I learned in my first job, combined with a great education, set me on a path to earn a good living. I remain grateful to this day for my opportunity to work for pay.

merce and Industry is committed to advancing Arizona's competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans. http://www.azchamber.com/.