Last year, there was a loud outcry from liberals for something called a “living wage,” which, according to the dictionary, means “an amount of money you are paid for a job that is large enough to provide you with the basic things (such as food and shelter) needed to live an acceptable life.”
“Acceptable life” is a very subjective term. Some feel that a warm and dry place to sleep, food to eat and serviceable clothes constitute an acceptable life. Others feel that surrounding yourself with electronic devices, big-screen televisions and big pickup trucks or fast cars is the only way they can have that acceptable lifestyle.
Average workers earn anywhere from the current minimum wage of $8 an hour to hundreds of thousands a year, and some feel that is too large of a gap. It’s ironic that many government workers seem to be at the top end, while the people who pay their wages are at the lower end.
Minimum wage earners are widely separated from the “haves” in our society. But how do the haves typically get there? Well, they usually begin by not being satisfied with an entry-level job and they seek out ways to better their earning potential. Education, experience and searching the job market are some ways. Creating something that everyone just has to have such as a robotic refreshment fetcher is another way.
There are thousands of job classifications, and the compensation level for each is dictated by the free market or a collective bargaining agreement. This is the way it should be, and government shouldn’t tinker with wage levels because they don’t control the marketplace — yet.
The $8-an-hour jobs are typically for service industry workers — jobs that used to be called “entry level” but have now become long-term employment for many. Some in our society feel that these folks should be earning considerably more for their efforts so that they can live that illusive “acceptable life.”
The City of Lompoc currently has 17 job classifications that would be directly or indirectly affected by a minimum wage increase. Keep that number in mind; it will be handy later.
Gov. Jerry Brown signed legislation (Assembly Bill 10) to increase California's minimum wage to $9 this July 1 and to $10 per hour on Jan. 1, 2016. He and his fellow Democrats think that this will solve all those “acceptable life” issues. They are wrong.
Demonstrations organized by unions urge raising the minimum wage even higher to $15 an hour. Why would unions support a minimum wage increase? Simple, because they will demand even higher wages for their members, which is what happens every time it has been increased, and the same thing will happen at every other business that pays more than the minimum wage.
Let’s take a quick look at the economics of raising the minimum wage. If $8 an hour could produce a $10 meal at your local fast-food restaurant, how do you think raising the cost to produce the item will eventually impact its cost to the customer?
Service industries operate on a tight margin so they can’t afford to absorb the additional cost, therefore prices will rise to compensate for the additional wages or they will cut worker hours to recover the increased cost of production.
Remember those 17 city workers in Lompoc? According to a staff report, the resulting increase in costs across the city is going to be about $56,000 annually. How will our city deal with the rise in labor cost?
In a report to the City Council, the staff said, “The city’s Human Resources and Payroll Divisions are planning to review the level of services provided and/or the program fees charged to mitigate the effect on individual budgets due to the unfunded mandate imposed by the state.”
The actions being considered by the city are instructive. They’ll either cut out more than 6,200 hours of work to recover the $56,000, which is the equivalent of nearly four part-time workers (20 percent of the 17 people affected). Or they could just raise consumer cost (fees) like other businesses will.
As Councilman Bob Lingl pointed out, minimum wage workers won’t have a more acceptable life because there will be fewer part-time jobs available and/or it will cost more to buy things they want.
Changing the minimum wage may have made Democrats and community activists feel good, but the overall impact on the lives of those they are trying to help will be negligible — in fact, it may make things worse, as Councilman Lingl pointed out.
Oh, next year the minimum wage will go up again to $10 per hour. How many people will lose their jobs, and how much will hamburgers go up then?
— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committee since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at firstname.lastname@example.org. The opinions expressed are his own.