Bottom Line

How minimum wage and union laws hurt those they intend to help
Sept. 5, 2017

How minimum wage and union laws hurt those they intend to help
    
 Glenn Hamer 
 September 5, 2017

 
 
In case you missed it, I authored the following column, which appeared in The Arizona Republic on Saturday.
 

Labor Day is the perfect time to reflect on Martin Luther King, Jr.’s words, “No work is insignificant. All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.”

I’ve tried to live King’s lesson. Admittedly, at 16 I wasn’t conscious of how profound his insights were when I started my first job assisting at the bun station at my local Burger King.

That job was less about career development and more about a way for me to earn some gas money and save for college. I was paid a dime above the day’s minimum wage of $3.35. Arguably, I was overpaid. As a high-schooler, I brought few discernible skills to the position.

But the experience was incredibly valuable. I learned a little about customer service, about showing up on time and looking halfway presentable. That first job, believe it or not, set me on my way. 

First jobs have had similar impacts on those I interact with every day. I work with former ice-cream scoopers, movie theater box office cashiers, lifeguards, and one-hour-photo developers. My colleagues and coworkers all took those first job experiences with them into their next job, and then their next one, and finally, to their careers today.

King’s lesson is especially timely. We live in an era when honest work and the risk-takers who create jobs – especially entry-level ones – are taking a beating.

Loud voices claiming to represent the interests of workers have advanced the dangerous idea that entry-level work is practically exploitation, that job creators don’t care about their employees, and that upward mobility is reserved for just a few.

These interests, though, are actually advancing an agenda that makes it harder to earn a living, erecting roadblocks between a job and a paycheck. 

For example, voters in Arizona last year adopted a measure to phase-in a dramatic increase in the state’s mandatory hourly minimum wage. Voters in Flagstaff went even further, opting for a $15 minimum wage.

The same statewide initiative, Proposition 206, included a component that required employers to provide paid time off to employees.

Such laws aren’t the path to economic security, though. They just make hiring more expensive and more difficult.

Employers can’t take a risk on an enthusiastic young person with little to no experience trying to grab that first rung on the career ladder, or someone trying to land a job after a long absence from work life. Job creators, rather than investing in new hires, have to divert resources to higher payroll costs and employees on leave. 

Proponents of such mandates will argue that they possess more enlightened sensibilities and care for the working poor and those at the margins of society. 

But there’s nothing caring about artificially pricing a first-time job-seeker out of the labor market, or accelerating the replacement of entry-level job functions with robots because teenage workers are too expensive. There’s nothing enlightened about making it harder for a single parent trying to reenter the workforce and earn a living. 

The same crowd that calls for a higher minimum wage will also point to growing income equality or high CEO pay among the Fortune 500 as justification for new mandates on employers.

They ignore, however, the harm they do to an entrepreneur whose small business can’t grow because labor costs have made expansion impossible. 

There are more examples. So-called joint-employer rules that place the same legal liabilities on small franchisees as corporate parents, regulations requiring businesses to facilitate union organizing, and the expansion of overtime pay mandates all make job creation more difficult. 

But this is about much more than stifling the expansion of the GDP or sending economists’ charts and graphs in the wrong direction.

When we make hiring harder, we snuff out opportunity, and we make the dignity that comes with all types of work harder to achieve.

  

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry