$6.85 Not Enough for Ohio's Congressmen

Yesterday in the U.S. House of Representatives, under the steady guidance of newly-elected Speaker of the House Nancy Pelosi, the Fair Minimum Wage Act was overwhelmingly passed by members of both parties. The Fair Minimum Wage Act, if it passes the Senate unchanged, will raise the minimum wage in three steps over the next 26 months to $7.25 an hour. While all Democrats voted for the bill, many Republicans crossed the line as well to support the measure. In all, only 116 Republicans voted against it, with 4 abstaining from the vote. It was no surprise that each of the Ohio delegation's Democrats voted for the wage hike, but six of the Republican members abdicated on the bill as well. Jean Schmidt (R-OH 2), Michael Turner (R-OH 3), Paul Gillmor (R OH 5), Steve LaTourette (R-OH 14), Deborah Pryce (R-OH 15), and Ralph Regula (R-OH 16), all were supporters of HR 2, and all should be on the receiving end of concerned e-mails, phone calls, and letters.

The minimum wage is an issue that is never given honest debate in the public arena, because anyone who wishes to speak against its merits is simply shouted down with accusations of hating poor people, when the opposite is actually true. Raising the minimum wage only affects workers in entry-level positions, a very small percentage of the workforce and an even smaller sector of workers supporting a family on that salary. According to Dept. of Labor statistics, a mere 479,000 workers were paid at the minimum wage last year, which does not even equate to 0.25% of the American population! Let us think logically then, considering the fact that most of the entry-level jobs in America (fast food, restaurant workers, grocery store clerks, and public recreation employees like lifeguards and YMCA referees) are worked by either high-school or college age students who are not relying on their part-time work as their sole means of income.

That leaves us with the very small group of workers who are relying on these jobs to feed their families. Raising their hourly wage feels good, doesn't it! Boy, it sure does! But, as with most government solutions in history, raising the minimum wage will create more problems than it is worth for these workers. The grocery stores they shop for food at will have raised their prices to offset the wage increases, the public recreation facility that they send their children to as a means of babysitting will charge more, the gas stations will raise their prices to compensate for their higher pay, and on and on. All of these factors will combine to eat away at most, if not all, of their pay raise, making it a moot point. Aside from price increases, firms will not be able to hire as many new workers, making jobs scarce as well for those who need them.

Who does the minimum wage help, then? Well, unions who operate on contracts with set pay raises certainly benefit. When it comes time to renegotiate their next deal, if they wait that long, unions can simply point to the unskilled laborers making $7.25 and demand more based upon their status as skilled labor. Then, the same thing happens to these firms as did the entry-level firms: they have to raise prices to make up for the wage increases.

In Ohio, voters recently passed an increase to the state minimum wage that raised it to $6.85, effective January 1, 2007. The law also increased tipped employee minimum wage to $3.43 an hour, and instituted an annual increase tied to the rate of inflation. Given a conservative, steady amount of inflation, 3%, in 2008 Ohio's minimum wage will rise over $7.00, and in another few years we will be talking about minimum pay near $10 an hour, as there is no cap written into the legislation.

Recently I spoke with a Columbus-area restaurant owner who estimated that the current wage hike in Ohio would require his business to make at least $0.30 more off of each customer walking through his doors. What do you think he is doing to keep his business from losing money? That is right, he is being forced to raise his prices to compensate. The kicker to this story is that he is not paying any higher wages to his kitchen staff, as they already begin at $9 an hour or higher, but simply to his serving staff for their mandated wage increase of over 61%. Even more ridiculous is that his servers receiving the wage increase typically garner around $10 an hour simply in tips and gratuity on a bad night. He told me, as well, that most other restaurant owners he had spoken with where in the same boat: raise prices to avoid losing money.

A friend of mine relayed this story about a major Ohio city's YMCA, where many inner-city youth are able to enjoy low-cost sports leagues, swimming classes, and after-school activities. They recently inquired about returning to work part-time while in college, and was told that the minimum wage increase had effectively prevented them from bringing on any extra help. The YMCA was also forced to drastically raise membership costs, as well as enrollment fees and league fees, in order to stay afloat. As a result of this, many of the inner-city children who are able to receive guidance and a safe haven to have a good time in through the YMCA will no longer be able to afford it.

Voters went to the ballot box in Ohio on November 7, and in Congress yesterday, and made a decision rooted simply in making a good stage show. Raising the minimum wage sounds great, and, of course, if you vote against it, you hate poor people. Our kudos go out to the five Ohio Congressmen who stood up for what was right, rather than what was easy: Steve Chabot (R-OH 1), Jim Jordan (R-OH 4), David Hobson (R-OH 7), John Boehner (R-OH 8), and Pat Tiberi (R-OH 12). One of the quotes given by a Republican in opposition sums it up best. Rep. Jeb Hensarling (R-TX) said, ""In America we can either have maximum opportunity or we can have minimum wages. We cannot have both." This is a bad deal for the poor in America, and every single one of the Representatives, Republicans and Democrats alike, who voted for this hike should be ashamed of themselves for placating this small group of America's poor.