Higher minimum wage not sustainable

A response to “Philadelphia behind the curve on minimum wage” that ran Oct. 27.

SteveHeadshotColorAbout a month ago, I sat in the back of the Wendy and Solomon Luo Auditorium in the recently-dedicated Katz School of Medicine, surprised by an interruption in a Board of Trustees meeting.

With President Theobald minutes into his regular address to the board, 15 Now members started shouting their displeasure with Theobald and the university because they hadn’t sat down to discuss the prospect of raising the minimum wage.

It takes guts to interrupt a Board of Trustees meeting at an institution of this size. As they continued on with their protest, however, I couldn’t help but chuckle at the fact they were arguing about something that never made any sense to me: raising the minimum wage.

The idea of raising the hourly wage for workers is an issue with plenty of arguments from both sides, making it hard to decipher what is true and what isn’t.

According to a letter to President Barack Obama last year signed by more than 600 economists nationwide, an increase in the minimum wage would stimulate the economy while keeping a substantial amount of minimum-wage workers.

“Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth and providing some help on the jobs front,” the letter reads.

It is a possibility that even if no jobs are lost, it would be harder for employers to hire new workers, given the added costs of the raise in minimum pay. According to a Federal Reserve Bank of Chicago study, a 10 percent raise in minimum wage would lower the number of low-skilled workers by 2-4 percent, along with total restaurant employment by 1-3 percent.

One of the main arguments 15 Now activists frequently discuss is the impact a minimum wage increase would have on poverty.

“Our current welfare programs spend about $1 trillion per year and are lifting about 40 million Americans out of poverty. That is $25,000 per person, still much too expensive, but a bargain compared to $110,000,”  a Forbes.com article said.

It’s important to note that economies in cities are vastly different, so it can’t be guaranteed that a rise in minimum wage solely in Philadelphia—or even at Temple—would have similar costs to a national increase.

Moritz Ritter, an assistant professor in Temple’s economics department, believes that while living on the current minimum wage is difficult, raising it isn’t the ideal answer because some businesses would be impacted more negatively than others.

Ritter said it’s “very hard” to live off minimum wage, especially in a large city.

“So maybe you should do some redistribution [of wealth], but there are better ways, in my opinion, then raising minimum wage … so we should have a more generous income tax credit that would be paid over a much broader tax base,” he said.

Ritter added that 15 Now’s proposal is unique because it wants the minimum wage to be more than double that of Philadelphia’s current wage. This could have an unprecedented effect on jobs, he said.

“In the past, we have seen small increases in minimum wage, and typically what people find is the employment effect is small,” he said. “So if you go from, like, $8.25 to $12.50, that’s a much bigger jump, so we may actually end up losing jobs.”

It was clear from my conversation with Ritter that this topic was an easy target, yet an extremely difficult one to debate—given hundreds of scenarios, raising the minimum wage could solve poverty or crush the local job market, all depending on the specifics of each business and how it operates.

For 15 Now to argue that everyone on campus deserves $15 an hour, however, seems excessive. Does a job at Paley Library warrant $15 an hour? What about one in Campus Recreation? Or the TECH Center?

To me, it doesn’t. There are, however, exceptions to the rule, but it isn’t necessarily a minimum wage issue. Because of this, I advise 15 Now to leave the issue of raising the minimum wage up to the city of Philadelphia, and not to a university that has enough issues to combat already.

Steve Bohnel can be reached at steve.bohnel@temple.edu.

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