Obama gives false hope to employees
President Obama made two lofty promises to the country’s entry-level workforce in his State of the Union. For their own sake, the employees should hope he’s not able to keep them.
The commander-in-chief has asked Congress to command employers to do the following: Pay at least $10.10 an hour to all employees, regardless of age or experience; and provide up to seven days of paid leave per year.
The minimum wage increase — 40 percent jump over the current rate — has already been evaluated by the nonpartisan Congressional Budget Office, which estimates that a half-million Americans would lose their jobs if the policy took effect. These aren’t just statistics in a research paper: They represent real people whose lives are upended by the loss of income and opportunity.
For instance, when Michigan increased its minimum wage last year, one nonprofit restaurant in a small college town was forced to close entirely, eliminating 12 jobs along with it. The employees didn’t need a raise — they needed the job.
These unintended (and often ignored) consequences aren’t limited to one small town: They take place in cities big and small each time legislators heed the partisan call to “raise the wage.”
It’s not only wage mandates that have associated costs that consumers are reluctant to fund. Benefit mandates create hardship as well.
In San Francisco one survey published by the Institute for Women’s Policy Research (IWPR) found that nearly 30 percent of the lowest-paid employees reported lost hours or jobs at their place of work following passage of a paid leave mandate.
You might expect that these costs would be offset by beneficial changes in workplace health for a sick leave mandate, but this hasn’t materialized. A recent survey of Seattle employers, released by the city auditor, found that nearly 95 percent reported no change in the number of sick employees at work after Seattle passed a paid leave mandate. The IWPR reported similar results in San Francisco.
And yet San Francisco may be exactly the city the president and his speechwriters had in mind when they worked on the State of the Union. That city’s grand design for the hourly workforce doesn’t stop at wages and benefits: Its Board of Supervisors recently passed a series of laws at the behest of local unions designed to eliminate part-time employment.
Fortunately, Congress can choose not to follow him down this road to ruin for the entry-level job market.
Michael Saltsman is research director at the Employment Policies Institute, which receives support from businesses, foundations and individuals.