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Minimum wage hike comes with a price

Minimum wage hike comes with a price

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By Michael Coulter

As you are well aware, Ralph, Crittenden County workers employed in the many minimum wage jobs in the area, such as peddling hamburgers or delivering pizzas around town, that they just got a raise from $9.25 to now $10-an-hour (and next year the minimum wage will go to $11).

All these minimum wage workers can give a big thanks to our generous politicians in Little Rock, and yes, the naïve voters, for making private business owners shell out more of their marginal profits to pay for these raises.

Listen Ralph, don’t try and label me as a scrooge or a tight wade because we all of us would like to earn more money and, believe it or not, I am happy for these lowskilled laborers getting a $1,560 annual increase.

Let’s get away from the emotional aspect in all this and look at it from a purely economic point of view for a moment. As I have pointed out time and time again, Ralph, for every action there is an equal reaction and in this particular situation the downside is that while the minimum wage is now at $10 an hour many private business owners, particularly those that operate on a small profit margin, will have to make some very serious changes.

Either they will have to increase the prices of their products or goods simply reduce the cost of their hired labor which will mean that the remaining employees will have to pick up the slack or reduce the workforce.

As in any profitable private business it is all about providing a quality product at competitive prices while at the same time earning a profit to remain in business.

Let me remind you Ralph that many years ago when places like McDonalds, Burger King and the bulk of small businesses provided employment to non-skilled workers it was originally meant to hire young, enthusiastic individuals such as teenagers and those just entering the workplace. These jobs were meant to instill responsibility and learn basic worth ethics.

These entry level jobs were never, ever meant to provide an income capable of raising a family or long term. As times changed we have experienced many of these entry-level, low-skilled jobs being held by struggling low-skilled adults with children and families to raise on incomes that are far inadequate to meet their financial needs.

You know as well as I Ralph that almost all of these small, mom-and-pop businesses can’t afford to be in business if all their income is being spent on lowskilled labor. Even the big fast-food franchises that were specifically designed around minimum wage jobs are being forced to convert a labor force into automation, self-service and limited labor.

And you know what that means Ralph? It boils down to a large number of these minimum wage workers being laid off and forced to depend on government handouts such as food stamps and other taxpayer supported subsidies. Many of the minimum wage workers will also experience a drop in the number of hours they work per week, meaning that at the end of the pay period they probably won’t be making any more than they did when the minimum wage was at $9.25 an hour or even less.

Let me make this clear, Arkansas businesses must pay their employees no less than $10 — a 75-cent increase. The wage increase amounts to a $30 per week raise for employees who work 40 hours a week.

Listen, I simply don’t go along with the argument that this will help those living near the poverty line afford life’s most basic necessities. Isn’t that what government handouts were designed to take care of Ralph?

What we’re experiencing here is politicians dumping the burden of taking care of these non-skilled adults on the struggling business owners.

I will say it again, Ralph, there needs to be more emphasis on encouraging these low-skilled adults to better themselves financially by learning a skill or a trade that guarantees a living wage.

By Ralph Hardin

OK, Michael, first things first… you can’t give Arkansas voters a chance to give themselves a pay raise and expect it not to pass. So, it should not be a surprise that the ballot measure that will eventually set an $11.00/hour minimum wage in the state passed in 2018.

The fact that you’re not a fan should be no surprise to anyone who reads the Point/Counterpoint. If you recall, when the initial bump went to $9.50 last year, there were calls from some Republican (imagine that) lawmakers to create some exemptions, for the handicapped and for minors, for example. Pretty typical of the average Arkansas legislator — trying to go against the will of the people through any means necessary.

How many times did voters make it clear they were in favor of bringing in casino wagering before it finally made the ballot? Didn’t the lawyers and politicians just make sure that two other measures (ones limiting the power of lawyers and politicians) got knocked off the ballot at the last minute when polls suggested TORT reform and term limits were things that the voters actually wanted?

If this ridiculous idea to exempt certain workers from the new minimum wage comes to pass, it will be just another example of bureaucrats telling us, the taxpaying voters of this state, that we’re too stupid to decide what we want for ourselves, Just like they’ve done in the past.

Now, I will agree with you on one thing, Michael… a higher minimum wage is going to put a crunch on some businesses, but that’s just how economics works. Currently, Washington, Massachusetts, and the District of Columbia have higher minimum wage rates than $11/ hour. Even San Francisco and Seattle have a $ 15/hour minimum wage, and other cities around the U.S. have higher than $11/hour minimum wage laws.

Now, I will admit that the cost of living in Arkansas is significantly lower than the other places I just rattled off, but I will also add that Missouri, our neighbor to the north, just enacted a $ 12/hour minimum wage law. So, we’re at $10/hour for the next year. Let’s talk about what, exactly, $10/hour gets you, Michael.

Assuming a full-time work week, $10/hour translates to $400/week or about $21,000/year (before taxes). Just so we all know, the federal poverty level in the United States for a family of four is $25,100. That’s a man, a woman and two children. So even at $10/hour, a family of four in a single-income household is still living in poverty.

So, both parents should work, right? That gets us up to about $42,000/year (before taxes). I did a little digging.

The average cost of child care (so both parents can work) is between $4,000 and $7,000 per year. So, with a couple of kids, one of the parents is basically working just to pay for the child care they only have to pay because they are working.

Will a higher minimum wage put some small businesses out of business? Yes, but in the age of Walmart and Amazon, the writing is already on the wall. You can go into any McDonald’s and they’ve already installed the ordering kiosks. You only need (for now) someone to actually flip the burgers and dip the fries.

It’s the same all over low-skill jobs are being consolidated or made obsolete. The number of workers isn’t going down, though, because new industries and jobs are popping up at a much faster rate than they were 10 years ago. Minimum wage jobs, whether it’s in the service industry, the computer industry or simple labor jobs, will always be there and there will always be a need for workers in those positions. And Michael, they deserve a liveable wage too!

The Arkansas workforce will adapt and evolve and ultimately, hopefully, we’ll have fewer people in the state living in poverty.

And shouldn’t that be the goal?

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