So my wife and I are out running errands, and we stop at a big grocery store. As we go through checkout, I see probably the biggest argument against raising the minimum wage I can think of: no cashier.
I look up and down the checkout lanes. Most are self-checkout and bag-your-own. It gets me thinking. When I was a kid, self-serve gasoline was unheard of. You pulled up at a gas pump, rolled over a hose that would “ding-ding” for an attendant, and out would come someone to pump the gas for you, clean your car’s windows, and offer to check your car’s oil level. Today, gas station attendants are almost extinct. It’s almost all self-serve gas now. Also gone are our local movie theater ushers, and our bowling alley pin setters. I’m not old enough to remember elevator operators, but I’ve seen them in old movies. They’re gone too.
Employers are always looking for ways to cut costs. Elevator operators, pin-setters, movie theater ushers, and gas station attendants have all been priced out of existence. Based on what I saw at the grocery store, checkout lane cashiers are being priced out too.
Force employers to pay people so much that they produce less than it costs to hire them, and before long, in comes automation and out go jobs.
The costs of hiring someone go well beyond wages. There’s also unemployment insurance (required), workers compensation insurance (required), Social Security/Medicare tax (required), liability insurance to cover actions of employees (a virtual necessity), and other benefits an employer might offer such as paid sick days (usually optional).
The February unemployment figures recently came out. The national average rate is up a bit to 6.7 percent. But for young people, who have the least education and work experience and therefore are the least-productive workers, the official rate is a Depression-level 11.4 percent—and it’s 15.8 percent if we include the nearly two million persons ages 18 to 29 who are not counted as unemployed because they’re so frustrated they’ve given up looking for work.
It’s even worse for young people who are minorities. Among young blacks the official unemployment rate is 19.3 percent (23.8 percent if we include those who’ve given up looking). Among young Hispanics it’s 12.5 percent (16.6 percent if we include those who’ve given up looking.)
President Obama is agitating for a $10.10 an hour minimum wage, up from the $7.25 an hour federal minimum. Doing this would make it even more expensive to hire people with poor educations, few skills, and little or no work experience. There’d be a bigger gap between what these people produce for an employer and what they would receive in wages and benefits. They won’t get jobs; it’s as simple as that.
The recent Congressional Budget Office report says a higher minimum wage would likely put hundreds of thousands of entry-level people out of work. Those in minimum-wage jobs who manage to stay employed would receive higher pay, but as the example of the cashier-less checkout lanes shows, their employers would surely start looking for ways to eliminate their jobs.
Two more points:
First, throughout the minimum-wage debate we speak as if persons with minimum-wage jobs will always have these low-paying jobs. In fact, however, these are usually first jobs, second jobs, or jobs to tide people over until they can find higher-paying work. In other words, they’re temporary or transient. There is not a permanent group of minimum-wage workers.
Second, what’s magic about $10.10 an hour? If an employer offers $10 an hour, should the government force people to remain unemployed over one thin dime? The White House is crawling with unpaid interns—unpaid. They work for no pay … but not for nothing. The unpaid interns have decided it’s worth receiving no pay to have the experience, the connections they expect to make, the resumé they’ll be able to flaunt. There are many jobs where experience, connections, and impressive resumes might be worth low pay or even no pay.
It’s our lives. We should be able to work for whomever we want for whatever pay and benefits we agree to take.
Steve Stanek (email@example.com) is a research fellow at The Heartland Institute in Chicago.