This is a slightly edited version of a letter I sent to my pastor on February 6, 2007.
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Dr. Sherry Triggs, Pastor
Central Congregational Church
1248 SW Buchanan
Topeka KS 66604
Dear Sherry:
Congratulations on being chosen to give a talk on “Kansas Minimum Wage 101” at the Legislative Event for Advocacy in Faith later this month.
I know that you approach this issue from a different viewpoint from mine, and I was gratified when we talked last Sunday to know that you are actively seeking input from many perspectives. Thank you for the opportunity to present mine.
I understand that the faith-based approach to wage issues is often centered on the plight of those people who struggle with low wages, and this sometimes leads to the perception that employers are greedy, uncaring people, intent on exploiting the people who depend on them for a living. The answer, from that perspective, is to use the power of government to keep them in line and require them to be nicer people.
But the fact is that anyone smart enough to run a business is well aware that businesses get the best workers when they offer the best jobs, the best wages, the best working conditions, and the best benefit packages they can possibly afford. When businesses compete for customers it produces the best products and services; when employers compete for workers it produces the best jobs. No governmental interference is necessary for that to happen — the free market ensures it.
I know the people who advocate for a legislatively-mandated minimum wage or a hike in the wage already imposed will cite statistics claiming to prove that a minimum wage hike does not contribute to inflation or unemployment. Studies and statistics are kind of like experts at a trial: You can always find two or three to say anything you want, and both sides seem obligated to produce some.
Anyone who has earned a paycheck for more than a year or two knows that what you earn doesn’t matter – it’s what you earn in relation to what things cost that matters. And when the legislature forces businesses to increase their expenses, prices will go up. There is just no other way for most businesses to comply with a raise in the state-mandated minimum wage but to raise their prices. And when prices at the discount department store go up, the increased wages of the workers at the fast-food restaurant across the parking lot just don’t buy as much.
And prices also go up for the workers who were making a little more than minimum wage, and who did NOT get a raise.
The Office of Advocacy of the U.S. Small Business Administration released a study in September 2005 indicating that the smallest businesses in this country – those with fewer than 20 employees — on average must spend $7,647 per year per employee to comply with federal regulations. Some of the regulations are reasonable, and many of them are not.
So consider a hypothetical small business with 10 minimum-wage employees. This tiny firm is already spending some $76,500 per year to comply with oppressive governmental regulations. If the minimum wage is raised by 50 cents an hour, it will create another $10,000 in yearly expenses for this little business (10 employees x 2000 hours per year x $0.50 per hour).
I can guarantee you that will push some marginally-profitable small businesses out of the market. And it will keep many others from ever getting started in the first place.
According to the Small Business & Entrepreneurship Council’s “Small Business Survival Index 2006,” Kansas ranks 35th in the nation in policies that are friendly toward and encourage small businesses. Personal and corporate income tax rates, capital gains taxes, property taxes, sales taxes, death taxes, unemployment taxes, health care regulations, and taxes on utilities all combine to determine whether businesses can thrive and keep adding good jobs to the economy, or fall by the wayside.
So what would I recommend instead? How can faith-based organizations act on their very appropriate concerns for those who are struggling to pay their bills without punishing the small businesses which provide 50 percent or more of the employment in this country?
A good start might be to start working with the legislature to ease some of the unreasonable regulations imposed on businesses. When the costs of compliance are lessened, businesses will be able to pay their employees more without raising their prices.
Another approach is to help low-income workers qualify for better-paying jobs. As Dr. Ted Kane pointed out in a web memo published in October 2005 by the Heritage Foundation, “…the poorest of the poor are kept out of the labor market when the price of low-skilled labor is set artificially high through minimum wages. A minimum wage of $6 an hour makes it illegal for a single mother to work for $5 an hour, even if she wants to.” But if the churches help that single mother to improve her job skills, everyone benefits – worker, business, and the economy in general.
Would either one of these approaches be harder than mindlessly lobbying the legislature for a minimum wage hike? You bet they would. But taking the easy way out – advocating for laws that hurt small businesses and, in the long run, do not really help low-skilled workers – is not worthy of a caring community.
Thanks again for the opportunity to give an opinion.
My best wishes for a rewarding experience at the LEAF event.
Sharon
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