Five bad bites in Question 4 'cake'
On Sept. 15, The Republican Journal published an opinion column authored by freelance writer and activist Lawrence Reichard, arguing in favor of a minimum wage increase in Maine ['Let 'em eat cake']. Here are five inaccuracies and misrepresentations that the article perpetuates.
1) Mr. Reichard cites the Maine People’s Alliance in saying that the minimum wage, had it kept up with productivity since 1968, would be $22 today. Putting aside debate about the precise numbers (though it’s worth noting that The New York Times places the inflation-adjusted minimum wage between $11 and $18), it’s important to realize that calculations of this kind are often mistakenly based on broad gains in productivity over the entire economy, instead of the productivity of just minimum wage workers. In fact, while some professions have experienced massive gains in productivity, many minimum wage jobs have changed very little over the last half-century.
2) Mr. Reichard, after declaring that there are “good, solid economic reasons” to pass Question 4, writes, “The rich tend to squirrel away their money — one can consume only so much caviar and champagne — but the working poor spend it, and that stimulates the economy.” But Maine’s wealthy households don’t spend their time sipping champagne and snacking on caviar. Most are either small business owners — responsible for 57 percent of private-sector employment — or highly skilled professionals like engineers, doctors and scientists who contribute to Maine’s innovative economy and support institutions like the Jackson Laboratory.
3) Mr. Reichard admonishes the Manhattan Institute for failing to substantiate its claim in a recent Bangor Daily News article that the minimum wage reduces teen employment, and insinuates that disemployment effects are overblown. Here’s a short reading list if Mr. Reichard cares to educate himself on the topic:
a. A 2010 study from the Center for Business and Economic Research at Ball State University found that increases in the federal minimum wage had cost roughly 310,000 part-time teen jobs.
b. A thorough analysis of minimum wage policies in several countries, including the United States, revealed “a clear negative correlation between the level of the minimum wage and youth employment-to-population ratios.”
c. A study released earlier this year by IZA, a private, independent research institute, confirms these effects: “Minimum wages reduce employment opportunities for youths and create unemployment. Workers miss out on on-the-job training opportunities that would have been paid for by reduced wages upfront but would have resulted in higher wages later. Youths who cannot find jobs must be supported by their families or by the social welfare system.”
4) Mr. Reichard writes: Maine People's Alliance says Question 4 will help small businesses, because Maine small businesses pay higher wages than their bigger counterparts, and raising the minimum wage would create a more level playing field. According to the Portland Press Herald, Maine small businesses pay an average of $12.72 per hour, while big business pays only $10.07.” Those numbers come from a flawed policy report by the National Employment Law Project. In a recent op-ed, Patrick Marvin, a former policy analyst at MHPC, dismantled the study by pointing out that small businesses are particularly hard-hit by increases in payroll costs and that the study conveniently ignores all but one industry — retail.
5) Mr. Reichard’s disdain for the free market system is made even more apparent in his closing lines: “Whose interests are really being represented by the Maine Heritage Policy Center, the National Restaurant Association and the Maine Restaurant Association? Is it small business owners and restaurateurs who want to pay their workers a living wage? Or is it big, out-of-state chains whose fierce competition drives down wages and cripples the ability of small businesses and restaurants to pay a decent, living wage to their neighbors?” Since when did fierce competition between businesses drive down workers’ wages? On the contrary, when businesses compete for talented, hard-working employees, wages tend to rise in response to the increase in demand.
Liam Sigaud is the policy analyst for The Maine Heritage Policy Center. He lives in Rockland.