COMMENTARY | Right now one of the world’s most expensive games of chicken is unfolding in Washington, D.C. President Barack Obama wants to raise the federal minimum wage from $7.25, where it has rested for years, to $10.10. Despite making big waves recently by raising the minimum wage for all federal contractors to this level, Obama now faces strong opposition to raising the minimum wage for everyone else: The nonpartisan Congressional Budget Office (CBO) estimates that some 500,000 jobs would be lost by the time the new minimum wage was fully implemented in 2016, galvanizing critics.
It’s the age-old debate: Raise the minimum wage to a true “living wage” to help pull workers out of poverty and reduce the number of available jobs…or let the eroding minimum wage continue to stagnate and allow the poor to be eaten up by inflation. Raise the minimum wage and increase unemployment or ignore the minimum wage and let inflation suck down the poor like quicksand.
In this standoff the president should not blink. His opponent in this game of chicken, after all, has strong motivation to be dishonest about the effects of a wage hike. Employers make more profit if the federal minimum wage remains low and will therefore exaggerate any potential effects of a wage increase. Research of employment elasticity involving surveys of employers, therefore, is likely to be inaccurate.
“If the minimum wage goes up I will definitely stop hiring” is more likely to be employer bluster and bravado than reality.
Obama will ultimately win the game of chicken because most employers, particularly large employers, will handle the wage hike without cutting hiring. Employers who cut hiring, especially if doing so is more out of spite and politicized resentment than financial necessity, will quickly find themselves at a competitive disadvantage to employers who calmly bore the increased overhead costs. Consumers will prefer frequenting establishments that have more staff, and happier staff, than establishments where employees are few and bitterness reigns.
Quickly, employers will find that it is preferable to suffer a temporary decrease in profits than to gain a reputation for stinginess and overworking their staff. Workers and customers talk and, as the U.S. economy continues to improve, albeit slowly, employers who fought hardest against a true “living wage” will find themselves struggling for good PR and decent applicants. You gotta know when to hold ’em and when to fold ’em, and employers who can afford to pay better should realize the danger of holding a bad hand for too long.
Sure, jobs will be lost. Some small employers will be hurt. Individuals will indeed suffer, and for them I am truly sorry. However, it is unconscionable to argue that it is preferable for the masses of working poor to be allowed to suffocate beneath the quicksand of inflation. “An unlivable and unfair wage is better than no wage” is a cruel statement, and yet that is the statement being propagate by critics of raising the minimum wage.
If you are an employer, you should be willing to do everything in your power to provide your employees with a livable wage. If you cannot do this you should not be an employer. You have not met the basic requirements for your position. You should seek another endeavor, perhaps as an employee instead of employer.
There is no universal right to be an employer. If I cannot meet the requirements and expectations of my job I will not be allowed to continue in that position. Therefore, employers and other critics of raising the minimum wage should not grouse that such legislation infringes upon their “rights and freedoms.” After all, is it a right or freedom of an employee to perform at any substandard level they wish and remain employed? Of course not. Rules and requirements change and evolve over time. Some can adapt and meet the new standards, while some cannot.
That, ladies and gentlemen, is the free market at its finest. President Obama, I support your minimum wage mission.