About Clark Howard
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The minimum wage is a hotly contested issue. But I want to have my say on the topic in a nonpolitical way.
Polling says large amount of the American people want a raise in the minimum wage. There’s a proposal in Washington to raise it to $10.10. But it’s not gaining any ground in D.C.
The states, though, are going in all different directions. Vermont is going to raise the state minimum wage to $10.50 over the next four years. Then other states are saying no to a minimum wage hike; the GOP and many conservatives call it a job killer.
My opinion on raising the minimum wage
Here’s my take: Right now, we have great laboratory under way with some states raising the minimum wage and others keeping their hands off it. It gives the opportunity to see how it will play out in the real world. Will it kill jobs or will it raise the standard of living?
As far as being a job killer, I think you need to look back in American history. Farms used to employ 97 percent of all Americans. When mechanization of farms came about, there were fears that permanent and severe massive unemployment would result.
We all know how that played out. Today, farm employment is a fraction of 1 percent of the U.S. workforce and farms produce more food than ever. The jobs simply came from other places in an increasingly less agrarian society. That’s going to happen again.
But I want to look at the minimum wage debate from a different angle. What happens if you take a low-wage business, like fast food, and turn it into a high-wage business?
The operator of that business has to automate functions and then hire a smaller staff that makes more money. Look at the European countries where there already are higher wage rates. Their fast food restaurants have automated everything from ordering to paying. The cooking in the kitchen is done by robotics!
So when you raise wage rates in a labor-intensive business, you ultimately reduce how much labor it takes to run that business. Because machines take the place of workers.
That's why I love the idea of not coming to a national consensus on the minimum wage and letting the living labs of the states take over. We'll see if we change jobs or if we kill them. Do states that hold down wages end up with far more employment than the others? We'll find out.
The reality is you can’t support a family on the federal minimum wage of $7.25. But is the solution raising the wage? I believe the ultimate solution is education so we give people more ability to provide greater economic value for their hours worked.
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