Republican U.S. Senate candidate Scyller Borglum stood in front of a noisy creek last week to complain that “Liberals are proposing a minimum wage increase to $15 per hour.” To attack this fair wage policy, the rookie State Representative cited a Congressional Budget Office report released July 8 that said a higher minimum wage would lead to job losses. Borglum said that “common sense conservatives” like her understand that minimum wage jobs “were never intended to support families” and that we should instead incentivize workers to get the skills and training they need to land better jobs. She finally expressed the “personal philosophy” that a minimum wage is an “artificial floor” and that “we want something that’s market-driven,” lest we run the risk of unsustainable wages driving companies to automation.
Borglum is wrong on every point.
The CBO report itself shows that raising the minimum wage to $15 an hour does more good than harm:
The benefits of raising the federal minimum wage to $15 an hour by 2025 would far outweigh any costs, according to a report released this week by the Congressional Budget Office.
Former U.S. Labor Department chief economist Heidi Shierholz, now a senior economist with the Economic Policy Institute, said the move would raise wages for 27 million low-wage workers and would increase those workers’ family incomes by $22 billion annually.
“Inequality would go down; the number of people living in poverty would go down by 1.3 million,” Shierholz explained. “And nearly half of those would be kids because their parents get a raise” [“CBO Study: Benefits Outweigh Costs of $15 Minimum Wage,” KELO Radio, 2019.07.12].
But what about those jobs? As I have noted repeatedly (also here and here) and as even the CBO acknowledges, the research on minimum-wage-induced job losses provides little to no firm evidence supporting that fear:
According to Shierholz, most studies – including from the libertarian Cato Institute – have confirmed that raising the minimum wage hasn’t resulted in substantial job loss. Most businesses are able to absorb the cost through a reduction in staff turnover, which she says is typically high in the low-wage job market.
“Because people are just more invested in their jobs. That reduces a huge expense for employers,” she said. “The cost of someone leaving and replacing a worker can be up to 20 percent of annual wages” [KELO Radio, 2019.07.12].
On whether minimum wage jobs should support a family, I return to my own argument on the dignity of all workers and all work. All people who agree to sacrifice forty hours a week of their liberty and effort to a company deserve fair compensation for that sacrifice. “Fair compensation” means enough to cover the basic needs (not Heineken and hot tubs, but hot dogs and heat) of those workers and the people for whom they provide. Conservatives preaching “common sense,” not to mention “family values,” don’t get to turn to any willing participant in the workforce and say, “Your work isn’t important enough to support you and your family.” Work is work, and every worker deserves a living wage.
On the “artificial floor” of the minimum wage, maybe I just missed this under the rushing water, but when Borglum called for “something that is market-driven,” she didn’t seem to offer any distinction between the harmful, robot-portending artificiality of the $15-an-hour minimum wage and any lower minimum wage. Working just from what Borglum says in her video, without trying to put any words in her mouth, we must conclude that Borglum rejects the entire idea of a state-mandated minimum wage and prefers that all wages be determined by the free market.
Now Borglum could use abolishing the minimum wage as a campaign issue to distinguish herself from incumbent Senator Mike Rounds, who “has a history of supporting higher minimum wages.” But the same electorate that sent Rounds to the Senate in 2014 also voted to raise and index South Dakota’s minimum wage. And two years later, 71% of South Dakota voters rejected Republican legislators’ effort to repeal that minimum wage hike and index for the kids whom Borglum thinks don’t deserve a minimum wage.
It would thus appear that opposing not just higher minimum wages but any minimum wages won’t get Borglum very far in her quest for support from conservative South Dakota voters, who so far seem content with both Mike Rounds and an annually increasing minimum wage for all workers.
Minimum wages could and did support families in the 1960s, so she is absolutely wrong in her assessment. At $15 per hour the minimum wage would be just slightly above what the value of the minimum wage was in the late 1960s. Most wages at the time were 2 to 5 times the minimum wage, but a three person family could get by on the minimum wage.
There is something to be said for the market, but we all know what happens in South Dakota when someone moves jobs from Minnesota to South Dakota. They plummet, because business interests and state government put pressure on to keep wages low. They don’t really want the market to work to raise wages, because then other businesses would have to compete in the market. Those business hate the market.
In some communities the market does work, and they don’t have supporters of wage slavery as politicians and business leaders. Mostly these are progressive areas of the country, where there is a history of labor activism and valuing workers, rather than treating them as slaves. I can’t say South Dakota or other red states have ever valued workers. They mostly see workers as slaves.
So, yeah, if the market works, let it work. Many entry level jobs in Madison, WI are now at listed at $15/hr or more, and most are just a dollar or two below that. Where the market works, that’s great. Where the market is prevented from working, as in South Dakota, you need a legal minimum wage, and it should be set at a livable wage.
Cory’s analysis of the assertion that minimum wage jobs “were never intended to support families” is solid. Along these lines one might also ask Borglum, if these jobs were never intended to support a family, then what public policies does Borglum propose to assure that someone just coming into the job market, or someone who might be otherwise limited in employment opportunties, and can only find a minimum wage job, is still able to “support his or her family?”
Perhaps Borglum supports supplementing the minimum wage with taxpayer funded public benefits to fill the gap between the income she recognizes that is necessary to support one’s family and minimum wage? Is she an Andrew Yang supporter backing a $1,000 per month payment to every individual to add to the minimum wage on a worker is able to support his or her spouse and dependant children?
Can you hear that? Of course not. It’s dog whistle white supremacy. She means that white people don’t work for minimum wage, thus there should be no minimum wage. White store owners should be able to coerce workers to the lowest pay they can get away with.
I can’t think of a worse pitch to an owner to move the business to SD than, “Hey, move here and we Republicans will do all we can to keep the governmental boot on the neck of your employees. You’ll be the Royal and no worker will dare stand up to you!”
Bear makes a key point: If Borglum is right, if some work shouldn’t pay enough to support a family. then what do we do to support families whose only source of income may be one of those crappy, sub-minimum jobs? What do we tell the young parent who needs income while finishing a two-year or four-year degree to qualify for one of Borglum’s worthwhile jobs?
Work is work.
I appreciate Donald’s point: the market is great when it works, but it does not always work. As Aberdeen leaders noted during minimum-wage-hater David Novstrup’s risible appearance before the city council in April 2015, our tight labor market made even that year’s $8.50 minimum wage mostly unnecessary, as the city and other employers were generally having to offer more to draw talent. But let the economy go south, and we’ll need to protect workers from the predatory wage practices some bosses would like to try. The minimum wage is a necessary protection of labor rights against certain cheapskates who would abuse the free market for their own gain.
On the pitch Porter sees South Dakota making to draw business: for every one boss we attract with our artificially depressed wages (artifice created by government: wow, how does Borglum not notice and take umbrage at that interference in the marketplace?), we probably lose multiple working people who take their talent to better markets. With low wages, we gain skinflint employers (and skinflints at work will often be skinflints in other social interactions). We lose mobile, creative, innovative workers, and we’re left with a higher proportion or workers who are “stuck” here because of family commitments, lack of talent, or unwillingness to try something different… and that’s a workforce that can be more easily exploited. Oh, the feedback loop!
South Dakotans make up the difference in those skinflint wages by using taxes to provide a variety of other kinds of assistance the workers can’t afford. It’s the taxpayers who provide the support cheapskate business owners like Al Nostrap and family weasel out of.
So they not only cheat their employees out of a decent living, they take advantage of taxpayer’s money to do it. Hey South Dakotans! Do you want more aid for your local school, roads, sewers, etc? You’d have a better chance of getting it if you weren’t subsidizing cheapskates’ businesses.
Here’s what Borglum can do if she’s so opposed to a minimum wage:
“Minnesota lawmakers and top government officials took a rare bipartisan victory lap Monday to usher in what they called the nation’s strongest set of protections against wage theft, which has become a multimillion-dollar problem around the state.
“Making it a crime to hold back workers’ wages while boosting the state’s resources to enforce compliance emerged as a key priority for House Democrats last legislative session. DFL Gov. Tim Walz meanwhile lauded Senate Republican leadership’s help forging the new law that he signed in a Capitol ceremony Monday.
“The law doubles the number of state investigators who will probe wage-theft violations and conduct site visits while making it a felony to withhold workers’ pay in certain cases. The state has estimated that some 39,000 Minnesotans miss out on nearly $12 million in unpaid wages each year.”
Try that one on for size, SDGOP. Even the Minnesota GOP got on board for it because they recognized that stealing is stealing, regardless of who does it.
“investigators will zero in on industries and sectors known for higher rates of wage-theft claims — generally, labor-intensive occupations such as construction and hospitality.
“Leppink said wage theft occurs, for example, when employers don’t pay overtime, hold back entire paychecks or misclassify workers as independent contractors.
“Attorney General Keith Ellison, who attended Monday’s bill signing, is also targeting the practice through a newly opened wage unit in his office.”
is.gd/9e4fAC Strib paywall
Bet she’s a great tipper though.