Here in Montana this year, Helena Democratic representative Mary Ann Dunwell wants to raise the minimum wage from $8.55 to $12 an hour, and eventually to $15.
I think this is great…and I also think it’s terrible.
Let me try to explain.
I think this is great…and I also think it’s terrible.
Let me try to explain.
First of all, I make the Montana minimum wage of $8.55 an hour at one of my jobs...one I work 4 to 5 nights a week.
This private business that I work for employs around 45 people, and I’d say that 30 of them are making minimum wage.
I’d also say that every single one of these people is over the age of 18, with most of them in their mid-to-late-20s or early-30s.
Most of us don’t mind making minimum wage, because when you factor the tips we make each night into it, we’re really making about $20 an hour...oftentimes more.
The reason I tell you all this is so you know that I don’t make a lot of money, and that minimum wage increases would probably help me.
I say ‘probably’ because I’m not wholly convinced.
You see, if we went by Dunwell’s bill, all small businesses in the state would have to start paying $12 an hour starting in a year or so.
How would they do that?
- I guess one way is to take profits the owner would have gotten and give those to workers. Personally, I’m not sure how long owners are going to do this, and let’s be honest, for many small businesses the profits aren’t that large...if they exist at all.
- Another option is to fire workers or reduce hours.
- Still another option is to raise prices, effectively passing the costs of that minimum wage increase on to customers.
And let’s not forget that not a single American city currently has a $15 minimum wage.
The “fight for $15” national movement started seven years ago in 2012 and mainly among fast food and childcare workers.
The highest minimum wage in the country right now is Washington, D.C., with $13.25 an hour.
After that we have:
- $12 an hour in Chicago
- $12 an hour in Boston
- $11.50 an hour in Seattle
- $11 an hour in all of California
Now, for Seattle that minimum wage will go up to $14 if you’re not in a tip-making position, and $15 an hour if you’re working for a large employer that provides healthcare benefits, and $15.45 an hour if they don’t provide those benefits.
So how has it worked in Seattle?
According to the University of Washington, the raise to a $15 minimum wage has “added about $10 per week on average to the earnings of low-income workers” and has reduced “weekly hours slightly.”
We also know that “employee turnover decreased,” and that some of the more skilled minimum wage workers even saw their pay go up $19 per week.
Another thing that happened is that “fewer new workers entered Seattle’s low-wage labor market compared to the rest of Washington,” as the new minimum wage seemed to deliver “higher pay to experienced workers at the cost of reduced opportunity for the inexperienced.”
Another study concluded that the $15 minimum wage led to an “overall 3 percent increase in wages,” but “a roughly 9 percent decrease in hours worked - resulting in an aggregate decrease in paychecks.”
So in Seattle it seems that, on the whole, workers are making less money because they’re not getting as many hours, and the increase in wages they saw doesn’t make up for that loss in hours...although for some workers, they are making more money.
The wage increase has benefited some, while hurting most.
For some companies, however, it’s a benefit. While workers might make a little less overall on their paychecks, companies like McDonald’s - which raised their minimum wage to $10 an hour back in 2017 - have seen lower crew turnover rates and higher customer satisfaction rates.
Some figure that if the minimum wage were increased to $15 an hour, things like childcare would increase in cost by more than 20%.
"Unless the government and the taxpayers stepped up to fill in the gaps in increased day care costs, parents would have to pay substantially more," cautions one former CEO of an early childhood education program. "Otherwise, programs would go out of business and working parents would find it even more difficult to find day care for their children."
Montana already has a huge problem with childcare, mainly because there’s not enough early childhood care centers, and the ones that do exist are very costly to maintain as the state requires so many regulations...regulations which usually stipulate those early childhood centers have more employees.
Increasing Montana’s minimum wage to $15 an hour will force those centers to raise rates, effectively pricing many parents out of the market, which will in turn make the early childhood care crisis even worse.
Conclusion
Dunwell’s bill is HB 345, and it had its first hearing yesterday.
I do not for one second think this bill will pass.
You would think Democrats like Dunwell would take a harder look into this minimum wage discussion and, having done so, realize that the $15 minimum wage - while sounding good - just doesn’t make sense.
While we do know that the minimum wage is not working in this country, as it’s lost 9.6% of its purchasing power since it was last raised in 2009 at the federal level, the efforts to raise the minimum wage to $15 an hour seem short-sighted.
Here in Montana it would do more harm to small businesses than it would offer in benefits to workers.
Until Montana can come up with a viable option to increase wages without increasing costs for small businesses, the $15 minimum wage idea should remain just that - an idea.
Notes
DePhillis, Lydia. “Seattle is a guinea pig for $15 minimum wage. Here's what the latest research shows.” CNN Business. 23 October 2018. https://www.cnn.com/2018/10/23/economy/seattle-minimum-wage/index.html
De Pietro, Andrew. “The Best Cities to be A Minimum Wage Worker.” Forbes. 24 August 2018. https://www.forbes.com/sites/andrewdepietro/2018/08/24/best-cities-minimum-wage-earner/#1d4afda66ba7
Raphelson, Samantha. “Minimum Wage Rising in 20 States and Several Cities.” NPR. 30 December 2018. https://www.npr.org/2018/12/30/681055793/minimum-wages-rising-in-20-states-and-several-cities
Rivera, Andreas. “Is a $15 Minimum Wage Good for Small Business?” Business. 5 March 2018. https://www.business.com/articles/the-potential-impact-of-a-15-dollar-minimum-wage/
Romano, Benjamin. “Minimum wage increase in six cities working as intended, Berkeley study of food-service jobs finds.” Seattle Times. 6 September 2018. https://www.seattletimes.com/business/economy/minimum-wage-increases-in-six-cities-working-as-intended-berkeley-study-of-food-service-jobs-finds/
