I rise to offer a rebuttal to claims my colleagues on the other side of the aisle are making about their proposal to enact an unprecedented increase in the federal minimum wage. I come at this issue as a former small business owner and an employee who once worked for the minimum wage.
My colleagues gloss over the fact that the minimum wage is for entry-level employees. Young people and those new to the workforce are those who typically earn the minimum wage because it is their first job or opportunity to gain career skills. This is evidenced by the fact that a majority of minimum wage earners are between the ages of 16 and 24. These jobs are where workers learn to be dependable and how to work with other employees. This is why two-thirds of employees who start at the minimum wage are earning more than the minimum wage within a year.
Even more troubling are the claims my colleagues are making to justify this particular increase. Increasing the federal minimum wage by nearly 40% represents an arbitrary and unprecedented increase which is largely unsupported by economic analysis. Both in the HELP Committee and on this Senate floor, advocates of this bill have declared that an increase to $10.10 an hour would restore the minimum wage to the purchasing power it held in 1968. They make this claim because they use the Consumer Price Index to justify their point of view.
However, the government calculates several different measurements of inflation. Two common measurements include the Consumer Price Index and the Personal Consumption Expenditures Deflator. The problem is that the Consumer Price Index used by the other side artificially inflates their estimates of purchasing power because it does not reflect changes in our economy such as fluctuations in consumption patterns. The President’s own Bureau of Labor Statistics recognizes this problem in its own methodology and is one reason why economists consider other inflation measures such as the Personal Consumption Expenditure a superior method. It’s important to note that the Federal Reserve and the Congressional Budget Office both use this more modern measurement of inflation. That is just one reason why my colleagues are quick to deny the CBO estimates that we have all seen which suggest their proposed plan would result in the loss of a half-million jobs.
The minimum wage does not need to go up for minimum-wage employees to get a raise. The proposal before the Senate throws cold water on job creation and adds to the burdens businesses are already facing under the President’s failed health care program. Instead the Senate should be considering proposals which promote job growth. Let’s consider tax reform, growing U.S. exports and approving the Keystone XL Pipeline as several of my colleagues recently highlighted.
But let me also speak at a person level about the minimum wage. I have noted many times that I was a small business owner. My wife and I operated our own shoe stores in Wyoming and Montana. I know that all small business owners have two families, their own, and the family of those that work for them. One cannot credibly claim to be helping workers while at the same time hurting the businesses that employ them, especially under the guise of helping “working families”.
It appears that those in favor of the minimum wage bill fail to understand that "working families" are not only those that are employed by businesses, they are also those who own the businesses. By increasing the minimum wage, Congress would shut the employment door on the very individuals they are trying to help. Small businesses are the driver of our economy. The simple fact is that an increase in the minimum wage is of no benefit to a worker without a job, or a job seeker without a prospect.
Minimum wage increases also start an inflation cycle. When some people get a wage increase, then everyone has to get a wage increase to recognize those who know more, do more and have more skills. To pay everyone more, prices have to go up. When this happens people may make more, but they have to spend more so they actually don’t get ahead. At some point, someone actually has to produce more to get more. That can be done with new skills or a new idea.
The problem we are facing is one of minimum skills – not minimum wages. The effect may be low wages, but the cause is low skills. We need to address those workers who have few, if any, of the skills they need to compete for a better job and command higher wages. We need to start thinking in terms of skills, the kinds of skills that will help students support themselves and their families in the future, empower our current workforce to pursue higher paying jobs, and help those without a job become self-sustaining.
I sincerely hope my colleagues on the other side of the aisle reconsider their plans to continue pushing this effort. There are a number of bills this Senate can consider today that would promote job creation over an arbitrary increase in the federal minimum wage. Our focus should be on small businesses and creating a business environment that is friendly for growth. Higher prices and fewer jobs is not what Wyoming and the rest of the country needs in these fragile economic times.