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Mentzer: Today's minimum-wage job market is nothing like the one we remember (column)

7:21 AM, Feb. 28, 2014  |  Comments
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I've worked for minimum wage.

My career path in high school went this way: Entry-level minimum-wage job at a miserable fast-food restaurant, which I hated and dreaded and resented; then a hop over to a minimum-wage job in the shop at an oak furniture place, which I kind of enjoyed in a way, and at which I learned some new skills and even got a couple of raises, if I'm remembering right. Then I went to college and learned different skills that have turned out to be the ones I've built my career on to this point.

In an alternate universe, though, it's possible that I could have used my oak-furniture-finishing skills to build a career, and if so I would have had my minimum-wage origins to thank.

That is more or less the way it is supposed to work, right? But I was entering the workforce in the mid-1990s, a time of full employment and lots of economic growth. You couldn't leave the house without tripping over a job. People would wake up and have to shoo the jobs away, out of their yards.

We are in a very different sort of economy today, when 87 percent of minimum-wage workers are 20 or older, nearly half have some college education and more than 40 percent are working full-time hours.

Take another look at those numbers. They are the Wisconsin-specific figures cited Monday by economist Laura Dresser of the Center on Wisconsin Strategy, a liberal-leaning think-tank that has just released a report in favor of hiking the minimum wage to $10.10 by 2016.

"This is about holding up the bottom of the labor market," Dresser said Monday of a minimum wage hike, speaking on a conference call for reporters.

The conception - especially among people my age and older - of what minimum wage work should be, in other words, bears little resemblance to what it actually is circa 2014. There are a lot of people for whom these jobs are not entry-level stepping stones but actual, family-supporting jobs. And supporting a family on minimum wage in 2014 is just not possible.

'Job-killer'?

Would a minimum wage hike kill jobs? Dresser and the COWS report are at pains to argue not just that it would not create havoc in the labor market but that, I guess, it would have no downside whatsoever.

"The weight of the research shows that increasing the minimum wage has no negative impact on employment of workers," Dresser said.

But what about the recent report by the federal Congressional Budget Office, which estimated that, nationwide, a minimum wage hike would raise about 900,000 people out of poverty but also cost 500,000 jobs?

"It's a question of great debate," Dresser said. In fact, the CBO estimated anywhere between zero jobs and 1 million jobs lost, she said, and picked the midpoint for its official projection. For Dresser's part, though, there is "a very strong weight of evidence toward zero."

I am no economist, but let me say that I do not buy it. Not for a minute.

Getting to real trade-offs

A minimum wage hike would trigger lots of changes, and not all of the adjustments would end up meaning fewer jobs. The economic research Dresser points to is real, and what it shows is that there are lots of small ways businesses compensate for slightly higher labor costs that don't, in the real world, result in labor reductions. That's great! That is good news for those who would like to see a minimum wage hike.

But zero jobs lost? No tradeoffs whatsoever? That smells like a political argument to me. It has that "free candy" feeling, like when conservatives argue that tax cuts always pay for themselves. Whenever something is presented as all upside, I get suspicious.

So let's consider that CBO report. It finds that the effect of President Barack Obama's proposal to raise the federal minimum wage from $7.25 an hour to $10.10 an hour by 2016 would not just bring those 900,000 people above the poverty line but also would raise the wages of 16.5 million workers.

I guess reasonable people can have a different view of whether this trade-off is a good one. But you don't have to believe that there is zero employment effect to see this as a good trade.

In this economy, though, we need to grapple with the fact that for a lot of people - too many people - low-wage jobs are less like the first rung on a ladder and more like a treadmill, or a hamster wheel, that spins and spins without taking you anywhere.

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