Editorial

Imposing basic wage hurts those it intends to help

Published on: October 17, 2006

Minimum wage laws are like mom and apple pie — it is hard for many people to be against them.

That appears the case with Proposition 202, a measure on the November ballot that would for the first time establish an Arizona minimum wage. A recent poll shows that 77 percent of Arizona voters support the measure.

Employers in our state now follow the federal minimum wage law which establishes a rate of $5.15 an hour. This rate has not been increased since 1997 despite repeated efforts in Congress. This has encouraged some states to either establish higher minimum wages — as Prop 202 seeks to do here — or to increase ones they already have.

In the case of Prop 202, the state minimum wage would be $6.75 an hour, effective Jan. 1, 2007. Unlike the federal minimum wage, the state one would be automatically increased each year based on the cost of living, meaning that employers would be required to give minimum wage workers a pay increase if the cost of living went up.

While the many supporters of this measure may view this as a benign requirement which businesses could easily afford to pay out of their profits, that is far from reality.

It will not actually be the business that "pays." Ironically, it could the employees the measure is intended to help who actually pay for the change. Employers may end up hiring fewer people or laying off some of those currently working for them in order to adjust for the increased wage costs.

It could also be the customers of that business who pay when they see price increases to cover the higher wages imposed on the firms.

It is not proper for government — or in this case, voters — to impose wage levels. What workers earn should be determined by the marketplace and the value placed on the job by both the business and the worker.

The fact is that many businesses already pay above the minimum wage requirement, simply because they are seeking the best workers they can find or because their potential employees will not accept the lower wage. The job equation is not one-sided if the marketplace is allowed to work. It can work to the benefit of the employee as well as the employer.

Imposing mandatory wage levels skews the employment marketplace in unfavorable ways that end up hurting businesses, workers and consumers.



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