[Tennessee] Minimum wage hike won't fix poverty problem

from The Kingsport Times News

Decrying the poverty that characterizes far too many in our midst, a group of Tennessee Democratic lawmakers wants to raise the minimum wage from $5.15 per hour into the $6 to $7 per hour range.

If the legislation succeeds, Tennessee would join 18 states and the District of Columbia that have established state minimum wages that are higher than the federal minimum wage, according to the National Conference of State Legislatures.

But such proposals, for all their emotional appeal, confuse cause with effect. Raising the minimum wage may be well intentioned, but it does nothing to alter the underlying factors that keep some workers from achieving a living wage. Rather, the fundamental question lawmakers should be asking themselves is: What is the best way to help unskilled workers?

The best answer lies not in arbitrarily hiking entry-level wages, but in authentically raising educational standards across the board.

As Adam Smith observed in "Wealth of Nations," each country has a comparative advantage over others in one respect or another. For much of the Third World, that advantage is clearly low-cost labor. That being the case, it is clearly counterproductive to raise threshold wages in this country when cheaper labor overseas already is capturing those jobs.

A century ago, the American workplace resembled in many respects that found today in Third World nations. Through the formation of unions and the political exposure of particularly egregious working conditions, progress was slowly made.

Wages rose, the workweek and workday were reduced, child labor was outlawed, and safety provisions were mandated on the state and federal levels. All of these advances can be realized abroad, just as they have been in America. In fact, if unions, which have largely accomplished their goals in the American workplace, are looking for a way to increase their membership, they could do worse than by attempting to organize overseas.

Supporters of a higher minimum wage typically claim that additional increases are needed because the "rich are getting richer, while the poor are getting poorer.'' Although this is not entirely true, wage differences have widened over the past generation. But such bad economic policy as a mandated minimum wage for workers serves only to exacerbate that situation.

In many, if not most, instances those who get richer have earned that status or continue it through education, effort and hard work - opportunities which are available to everyone.

Increasing the minimum wage is not cost-free. Someone has to pay for it. Economic research indicates that those who pay the most are unskilled youth through fewer job opportunities, consumers through higher prices, and taxpayers through higher taxes or fewer services.

The best way to help unskilled workers in Tennessee is to provide opportunities for education and retraining.

Raising the minimum wage may make for good political theatre. It may, temporarily, make some workers feel better about themselves. But the best way to increase one's paycheck is to gain the additional skills that demand higher wages.