Today Oregon governor, Kate Brown, has signed the new minimum wage bill into law. That means that it's time for the sequel to The Maximum Minimum. I received positive feedback on my last post, despite having a relatively low view count. I attribute the latter part of that partly to the lateness of posting. As I had mentioned, I did have a few more things to discuss with regards to minimum wage.
Wages vs. Welfare
I work daily in the world of public assistance in the form of Medicaid. Eligibility for this program and many others such as SNAP (food stamps), TANF, etc. are based on federal guidelines, not state. Currently Oregon already has one of the highest minimum wages in the country, $2 above national. A single person working a full time job (40 hours a week) at minimum wage in Oregon does NOT qualify for Medicaid. Same job at the national minimum wage would be within the qualifying income range.
So, the higher the wage, the fewer people getting public assistance. That's great, right? In terms of health insurance, it can be the difference between getting free healthcare via Medicaid, or having to pay for private insurance. It's not just the premiums, which could be as low as a few dollars a month, to a few hundred depending on certain factors. What about deductibles and co-pays? If a person actually has to use the insurance, they could end up spending more total than the increase in pay that disqualified them from Medicaid.
What about someone receiving SNAP benefits? Again, this is a federal program, based on federal guidelines. The more money someone earns, the less they can receive in benefits. Now, more of the wage increase goes to the food budget therefore nullifying the increase.
If the minimum wage adjustments are left completely at the federal level, it could easily be adjusted along with the federal poverty level (FPL) which programs such as Medicaid are determined on. The biggest argument to this is going to be the fact that the cost of living is different in different parts of the country.
Alternatively, continue to allow states to make adjustments to the minimum wage, but partner that with adjustment to the FPL based on cost of living. Alaska and Hawaii already have levels different from the national, so it makes sense that all the other states should not be deemed equal.
Obviously neither of those are being implemented at this time, and I doubt that anyone (the elected "leaders") is even considering either option.
What about a smarter solution to the minimum wage? I have a couple ideas that I will put out here that I feel could work better than what is currently being done.
Training wage vs. working wage:
With this idea an employee could be hired in at a minimum wage, but could not remain at that wage. I often see news stories about minimum wage wherein they find someone that has been working at fast food for 9 years and still makes minimum wage. With my idea, that would not be possible. After 1 year the employer would be required to give the worker a raise. Many companies have a trial period of some sort, so this would fit well.
The first argument would be that the employer would just go out and hire someone new instead of providing a raise to an existing employee. While that could certainly happen, it's not really in the best interest of the company. It makes more sense to give a small raise to an existing employee than spending time and effort on training a new person.
Industry standard wages:
Do away with the one size fits all strategy. Why should two people get the same wage for two vastly different jobs? Starting wages should be determined instead by industry, skill set required, training needs, etc. Someone that has gone to school for 4 years (or more) to learn a particular skill set should be expected to earn more than someone that has just graduated from high school. Even now you can do an internet search to find out what average wages are for a particular job. Why shouldn't that be incorporated into a minimum wage system as well? Let's pay the accountants with degrees more than we pay the 16 year old flipping burgers.
I imagine that there are many ways to actually use a combination of the above ideas, which would certainly be better than how things are today.
It wasn't that long ago that I was working a minimum wage job. I didn't complain about it being minimum wage, or even demand to be making more, I was just glad to have a job. I didn't want to work a minimum wage job forever, and I didn't. I now have a decent paying full-time job thanks to the effort I've put in to gain some experience. A major issue that I have with raising minimum wage is that workers like myself will not receive an equivalent wage. Many will go from making a few dollars above minimum to only earning a scant amount above, or actually be left at the new minimum.
Let me know what you think in the comments.