[PEN-L:6834] Min Wage editorial

["Eric Nilsson" <enilsson@xxxxxxxxxxxxxxx>]

Below is an op-ed piece about the minimum wage (actually
a California Proposition we get to vote on a few weeks) that
I sent off today to local newspapers.

It contains an argument (or mere claim) that I've not read before
related to the minimum wage.

Comments?
-------------------------------------------
 Tough Love for Inefficient Businesses

Up to one million California workers will see a wage
increase if Proposition 210 passes. This Proposition
provides for an increase in the minimum wage greater
than that mandated by recent federal law.

A further increase in the minimum wage would enable
many of these workers_and their families_to move
out of poverty. Clearly this would benefit these individuals.

Further, the passage of Proposition 210 would also be
good for the California economy as a whole. Both
consumers and most businesses will benefit from
an increased minimum wage.

The reason is simple. California has--for far too long--coddled
inefficient business that can only earn a profit by paying
sub-poverty wages. Such inefficient businesses provide
little to the economy as a whole.

Indeed, these business hurt the California economy. First,
businesses that depend on low wage workers fail to provide
the dynamism that leads to economic growth. Only rarely do
the new ideas and new technologies that lead to economic
growth develop within firms paying sub-poverty wages.

Second, and worse, businesses dependent on low wage
workers almost always fail to provide any meaningful
worker training. Why train a worker who will soon be
leaving because the pay and working conditions are so poor?

But such training is critical for workers if they are to find
better jobs after leaving their present low-skilled job. Such
improved training is also critical for the increased business
productivity which benefits everyone.

Some economists believe that the "welfare problem" is caused,
in part, by businesses that pay sub-poverty wages. These
businesses are unable or unwilling to train their workers and
this guarantees that their workers will never be able to find better
jobs.

Bad jobs lead to poorly trained workers. Poorly trained workers
expand the welfare rolls. Tax payers pay the price.

Proposition 210 provides "tough love" for the many California
businesses that have relied on sub-poverty wage. This Proposition
takes away the crutch--society's permission to pay sub-poverty wages--
that has permitted these firms to avoid discovering whether they can
make it as employers paying reasonable wages.

The vast majority of these businesses will find they are able to meet
this challenge. Most will find that they have the creativity to
discover a way to earn adequate profits while providing good jobs that
pay decent wages.

Such a result will benefit California consumers and other California
businesses. All will benefit from a more highly trained labor force
and a more rapidly growing economy.

Yes, some business owners will be incapable of surviving in
this new environment. These business owners will lack the
motivation or the creativity needed to run a business that provides
good jobs. The economy will be better off without them.

Eric

..
Eric Nilsson
Department of Economics
California State University
San Bernardino, CA 92407
enilsson@xxxxxxxxxxxxxxx