4/17/2006 - Should the $5.15 an hour minimum wage be raised?

Con: by Jay C. Moon, CEcD MMA President & CEO Note: The following editorial appeared in the Sunday, April 16, 2006, edition of The Clarion-Ledger and represents the position of the Mississippi Manufacturers Association. Raising the minimum wage is not the answer to improving the wages of Mississippi workers. The Mississippi Manufacturers Association believes that raising the minimum wage is bad economic policy which would diminish the supply of entry-level jobs and hinder overall job growth. It reduces opportunities for young people and others with low-skills who want to add to family earnings. Most economists also agree that raising the minimum wage harms small businesses. These businesses bear a disproportionate burden when the minimum wage is increased. A recent study by the Employment Policies Institute, Job Loss in a Booming Economy, 2nd Edition, suggests that the 1996 minimum wage increase of 50 cents per hour eliminated approximately 645,000 entry-level jobs. The proposed amendment introduced by Sen. Edward Kennedy (D-Mass.) to implement a three-phase minimum wage increase from $5.15 to $7.25 would have an even greater effect on entry-level jobs across the country. The answer to increasing worker wages is through education and training of workers. Employers are willing to pay higher wages for skilled workers. Those workers who start at and stay at the minimum wage generally do so for lack of skills. Increasing the skills of minimum wage workers, instead of pricing them out of the job market, is the answer. According to the National Association of Manufacturers, nationwide, 86 percent of those who would benefit from a minimum wage hike are teens living at home, second earners, families without children or single adults. Only 14 percent of the beneficiaries represent the sole earner in a household with children. And, most workers do not remain at the minimum wage for long. More than 65 percent of minimum wage employees move above the starting wage within a year. Additionally, the average income of those who start at the minimum wage rises 30 percent within the first year of employment. Most manufacturers, however, pay wages much above the minimum wage. The Mississippi Institutes for Higher Learning reports that for December 2005, manufacturing wages in Mississippi averaged $13.72 per hour, a 3.7 percent increase over last year. The November 2004 Occupational Employment and Wage Estimates by the U.S. Bureau of Labor Statistics (USBLS), indicates that workers in production occupations earn hourly wages of $13.17 nationally. According to the USBLS, the average entry level hourly wage for the top 25 occupations in Mississippi as of 2004, excluding professional positions, was $7.06. The average hourly wage for this group was $9.69. Another factor that may continue to affect wages is the growing shortage of workers in our country. The Federal Reserve recently reported that a shortage of skilled workers in finance, construction and manufacturing resulted in more rapid pay raises for those workers. In Mississippi, we have seen similar increases since Hurricane Katrina with the great need for workers on the Gulf Coast. Wages in a number of industries have been driven up as businesses scramble to fill positions vacated by workers taking higher paying jobs on the Coast. Many businesses also began to pay hiring bonuses as an incentive to attract qualified workers. Looking forward, the worker shortage will become an even bigger issue as the worker pool decreases due to the retirement of the baby boomers. Raising the minimum wage rate seems, on the surface, to be a remedy for increasing worker wages, but the best solution is to provide adequate worker training, creating higher-skilled workers who will be positioned to earn higher wages in the marketplace. To read the "Pro" position by Robert Shaffer, president of the Mississippi AFL-CIO, click here.

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