What would you do if minimum wage went up to $15?
New state legislature proposes to raised minimum wage to $15 by 2018, the proposed will increment wage in stages each year.
For many students who are working while attending school earning more means more money in their pocket. But, as according to Jonathan Wolf, economics professor at Central Oregon Community College, believes that raising minimum wage would mean for business to cut back hours which consequently would mean less for minimal wage earners.
“It is not uncommon for employers who are seeking to make a profit to seek additional profits by cutting cost. And the biggest coast in any business is wages,” said Wolf.
Oregon already has the second highest minimum wage in country at $9.25 behind Washington state at $9.35 according to qualityinfo.org, which is the department of employment online portal. However raising the minimum to $15 would mean higher taxes for individuals and families.
“Someone who is working at a minimum wage level would produce an income of just under $19,000 a year which would make them eligible for all sorts of aid. But if these same people are now making 30k a year, then they are no longer eligible for the aid that they would have gotten in the first place.”
According to Oregon Center for Public Policy, Raising Oregons minimum wage to $15 by the year 2018 would constitute a great progress for oregon’s working families and by 2018 about 589,000 workers would “likely see their wages raise directly as a result of the increase” Adding onto this number it also states that “As a group, workers would benefit directly and indirectly from the increase and would gain about $3.2 billion in additional wages during the three year implementation period.”
However, what the Center for Public Policy release does not add is how local business in the region would try to offset and balance out the higher pay and still make a profit.
“Every time wages goes up and makes labor more expensive, business who seek a profit will look for the least expensive alternative,” said Wolf, “and the least expensive alternative in modern days is to supplement technology into equation, [business] will keep looking for ways to make it cheaper. So we have a choice, keep 100 men employed in an assembly line or invest in technology that will replace 99 of them?”
As of now, Jefferson County has an unemployment rate of 9.2 percent, with a total number of 850 people unemployed and Deschutes county has an unemployment rate of 7.6 percent, with a total of 5,793 this according to the State of Oregon Department of Employment.
“So if you’re an employer or business, and the government decides that they will raise minimum wage then you’re going to look for cheaper alternatives,” Wolf said. “First of all your gonna cut back hours, second you will look at investing in technology because if you’re hoping to stay in business you’re going to look for the best and highest resources and utilization of your money, which might investing in technology and cutting back hours.”
During an interview with CNN, the president and CEO of starbucks affirmed that “there will be unintended consequences for small business at that level” and that [for small businesses] “across the country it will be very difficult to pay those types of wages.”
Essentially, as state legislature debates whether to pass a bill to increase minimum wage, it can be foreseen that it will affect not only the working class but also those who make more than the minimum as well.
“This is another sociological problem that would raise from the raising of minimum wage,” Wolf said. “Business that were promoting people due to excellent job performance or that were giving employees raises in their pay won’t have an incentive to push their employees to do better.”
This means that if everyone gets paid a high wage, business small and large would have to implement technology. Examples provided to look at the displacement technology makes would be looking at bank tellers vs ATM’s, car washers that are drive in, or restaurants like Chili’s – who are beginning to use tablets instead of human servers. By using technology, employers can
They would be force to take away job incentives like promotions and raises because they would simply not be able to afford them.
As the country slowly comes out the recession that affected us all back in 2008, it seems that the best possible solution isn’t to raise the minimum wage but to ask the questions: should there be a minimum wage? You decide for yourself.
Brayan Gonzalez | The Broadside