Our View: Businesses should decide how much to pay workers

February 12, 2014 

Lavell Robinson, a senior at BYU-Idaho studying human biology, serves food from the Chef's Point station at the Manwaring Center in Rexburg. Student employees at BYU-Idaho start at $8.3-, more than a dollar above Idaho's minimum wage.

PAT SUTPHIN — Idaho Post Register

During his State of the Union speech Jan. 29 and the following day at a Costco across the border from Washington in a Maryland suburb, President Barack Obama pronounced his support for raising the federal minimum wage to $10.10

“Let’s give America a raise!”

It is an effortless wish for politicians from our nation’s capital to Idaho’s capital to say such things because they aren’t paying for it.

“Raising the minimum wage doesn’t require new spending by the federal government. It doesn’t require a big bureaucratic program,” Obama told the Costco crowd in one of the most affluent areas of the world where wages are sky high and unemployment is very low — thanks to the surreal and artificial effects of federal government employment.

Obama chose the Costco backdrop because folks there are paid $11.50 an hour when they walk in the door. The president praised the big-box retailer for realizing that higher wages are a smart way to boost productivity and to reduce turnover.

“ ... Tell Congress to make this happen. Give America a raise.”

The Washington theory is that jacking up the minimum wage will produce a chain-reaction of prosperity across the land “because one of the things that’s been holding our economy back is wages and incomes being flat.”

We wish Idaho politicians wouldn’t buy into such faulty economic extrapolation, but it appears they have. Sen. Michelle Stennett, D-Ketchum, the Senate minority leader, has submitted a bill that would mandate a raise in Idaho’s minimum wage from $7.25 to $8.50 this July, and $9.75 in July 2015.

Talk is cheap. Business costs money. Like Obama, Stennett and other backers who might go so far as to push for an Idaho ballot measure if her bill fails, will wave their magic minimum-wage wands and leave the costs to others: employers, consumers and likely a few unfortunate people who pay for it with their lost jobs.

Imagine you are an Idaho coffee shop paying $7.25 an hour and you face the $8.50 mandate — $1.25 more than now. Here’s the math for your 10-member staff, each of whom works an average of 10 hours per week:

The $725 gross weekly payroll becomes $850. Since this is a business and not a government gig, you are either going to have to suck it up, charge more for coffee or reduce staff hours. Going to nine employees working 10 hours pencils out to $765 in 2014 and $877 in 2015.

This is not a great time to raise prices, even though some of us won’t flinch about an extra quarter for coffee so someone can earn more, right? Now, multiply the quarter at the coffee shop by the quarters all over town. In Stennett’s bill, there are changes for tipped and seasonal workers, too, that will increase pay — but possibly reduce jobs available to teens.

It could all be worth it according to this logic because “additional wages for minimum-wage workers and added economic activity resulting from higher wages will result in increased revenue for state government.”

OK, lower-tier workers get a raise, and the government gets revenue. We agree with Stennett that Idaho is in an unsustainable pattern. But low wages in Idaho are a result of a complicated set of circumstances linked to our shortcomings in education. We aren’t attracting enough of the kinds of businesses that pay well because we don’t have the trained workforce needed for them to locate here.

This was not lost on Gov. Butch Otter’s Task Force for Improving Education and especially the recommendations pertaining to sharpening the academic and career skills of Idahoans.

Forcing businesses to pay higher wages at the lowest tier will put some people out of a job and delay others from naturally seeking a better situation.

Kudos to Costco and other companies for paying the highest wages they can and for realizing the business and societal benefit. But they made the decision, not the government.

If we stay on the path of improving education and our workforce, the minimum wage problem will fix itself.

“Our View” is the editorial position of the Idaho Statesman. It is an unsigned opinion expressing the consensus of the Statesman’s editorial board. To comment on an editorial or suggest a topic, email editorial@idahostatesman.com.

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