The Fight against Low‐Wage Work
The Washington Post reports on its front page today:
Mayor Vincent C. Gray vetoed legislation Thursday that would force the District’s largest retailers to pay their workers significantly more, choosing the potential for jobs and development at home over joining a national fight against low-wage work.
That last is an interesting phrase: a national fight against low-wage work.
When laws like this are passed, there is indeed less low-wage work. As Robert J. Samuelson writes:
In the short run, even sizable increases in mandated wages may have moderate effects on employment, because businesses won’t abandon their investments in existing operations. But companies that think themselves condemned to losses or meager profits won’t expand. Not surprisingly, a study by two economists at Texas A&M finds that the minimum wage’s biggest adverse effects are on future job growth, not current employment.
In the case of the District's proposed law, we won't have to wait for future effects. The target of the legislation, Wal-Mart, is about to open six stores in the District of Columbia, where the unemployment rate is 8.5 percent. But the company says it won't open three of those stores if it is forced to pay a minimum wage 50 percent higher than other retailers.
Minimum wage and "living wage" laws can reduce employment in several ways. Jobs may be eliminated—ask your father about the guys who used to pump your gas for you, or your grandfather about movie ushers, or notice how groceries and drug stores are eliminating cashiers. Firms may hire a few high-skilled, high-productivity workers rather than many low-skilled, low-productivity workers. They may shift from labor to technology.
With total U.S. employment still lower than it was in 2007, we should stop the fight against low-wage work. Many Americans would rather have low-wage work than no work at all.
