It’s hard to argue with a businessman over the best way to run a business. Especially when that businessman possesses the credentials that Dan Haskell does: chairman of the Tennessee Jobs Coalition and a respected Nashville attorney.
That’s why it is important to respond with care to his Nov. 12 editorial in the Tennessean on why a minimum wage increase is an “overrated and unwise idea.” He says artificially manipulating the minimum wage through legislation is irrelevant to today’s economy.
The first thing to be noted about his argument is that he makes “small business” the moral center of the conversation. When our lawmakers tinker with a free economy, perhaps because they “mistrust” free enterprise, he suggests, it is businesses that suffer.
This a well-worn complaint. It is consistently employed by anti-regulation free-enterprisers. It doesn’t do the work Haskell thinks it does. Businesses are not burdened. Bottom-rung workers are.
Haskell says researchers are hard pressed to identify laborers who still work for the true minimum wage of $5.15 an hour. In fact, he says, the market has lapped minimum wage.
His assessment is accurate. A quick glance at the Quarterly Census of Employment and Wages Annual average for 2005, published by the Tennessee Department of Labor and Workforce Development, reveals a higher average market wage. The average low wage levels out to about $9-11 dollars for the service sectors that generally report the lowest wages.
What does this data signify, particularly since they show how Tennessee’s wages outrun federal levels?
Market wages, not legislated wages, increase the cost of doing business. Competition and supply and demand are driving wages up, all to the good of workers and business owners and operators. An increased minimum wage to over $7 would not be, then, a mechanism imposed on the market to suppress its vitality.
If anything, the minimum wage might help a business whose operating costs have outpaced its revenue to negotiate a temporary wage decrease. A higher minimum wage might mediate the all-or-nothing scenario of layoffs and the reemployment cycle. It also offers the opportunity for businesses to undercut the market when jobs are plentiful, saving businesses money in an unscrupulous way.
The conclusion that a legislative increase in the minimum wage will end up “hurting the people it is intended to help” is morally misguided. The minimum wage insures that workers are not unjustly contracted for their labor. It prevents business owners from taking the easy path to the perpetual problem for business: cutting costs.
Furthermore, it is about the relationship that business owners and operators have with their workers, confirming that when employees thrive (in and out of the office), businesses thrive, as Mr. Haskell says.
For these reasons, the minimum wage conversation ultimately is not about the best way to run a business. It is about the making sure that the “jobs gap” analysts observe to be present in the economy—a surplus of jobs accompanying a very low unemployment rate—doesn’t lower wages below a livable level.
Andrew Watts is assistant professor of Christian ethics at Belmont University in Nashville, Tenn. This column appeared Nov. 18 in the Tennessean and is used here with the author’s permission.