Do you think that taxpayers have an obligation to pay for the food, shelter and health care for the employees of certain businesses in Oregon? Because that’s what happens when a business pays less to it’s workers than is required to feed, house and care for their workforce.
A new report by Oregon’s Legislative Revenue Office, prepared at the request of Republican Rep. Julie Parrish, really tells the story of how taxpayers subsidize low wage businesses. The report shows that if the minimum wage were raised to $15.00/hour an average minimum wage worker would see an increase in total compensation of only $49/month. Even though their gross paycheck would increase by almost $1,000/month. Why is that?
Because as that worker makes more money they lose taxpayer paid benefits that go to some low income workers. Housing assistance, Oregon trail card eligibility (food stamps), and other public benefits would all be reduced for that worker as the minimum wage grows. In fact, the study concludes that a single parent with two kids would lose $30/mo total income plus benefits if the minimum wage were raised to $13.10/hour. Which points out that in reality, workers may be better off if the minimum wage were left unchanged, or raised to at least $15.00/hour. Increases in the range of $12.00/hour would certainly help the teenager who lives with their parents, but would hurt workers who receive other public benefits and are arguably the neediest such as single parents with children.
Increasing the minimum wage reduces the amount of taxpayer benefits paid to the working poor, and shifts the cost of paying for a healthy workforce onto the businesses who use that workforce. A low minimum wage socializes the costs of business. A higher minimum wage allocates the costs to the users. And it’s perfectly fine if those businesses then pass that cost along to the consumer. That’s capitalism.
Increasing the minimum wage also promotes another conservative principle. Reduction in government spending and an increase in individual freedom. With an increased wage, workers should have more choices in their lives. Rather than housing vouchers to be used only for qualified residences, they could use their extra pay to rent whatever they wanted. Or they could live with relatives and pocket the difference. Workers would no longer be tied to the restrictions that come with how they may use some forms of government benefits. And of course, with less need for the administration of benefits, perhaps government could even be reduced in size.
And finally, as the study shows that there is very little net increase in total income for many workers after you take into account the loss of benefits, those certain conservatives who believe that low income workers don’t deserve any raise can take comfort in the fact that it isn’t really a raise for many, it’s just shifting the cost from taxpayer to the business that benefits.
Increasing the minimum wage is a much fairer way to allocate the cost of that business and is closer to what most conservatives want. Make those that use government services to keep a healthy workforce pay for it by raising the minimum wage. Quit socializing the cost of production.
There are some downsides here. It is calculated that an increase in the minimum wage would cost Oregon approximately 20,000 jobs, or about 1% of total jobs. And, riasing the minimum wage would be a huge increase for workers who don’t receive benefits so the taxpayers wouldn’t receive any savings for those workers. (Which is why the earned income refundable tax credit could be a better way to deal with the single parent worker than raising the minimum wage)
A good article in the Oregonian explains the details of the calculation a bit more.