For Cost-Effective Economic Development, Consider the Minimum Wage
By President Mark MacKenzie
President Obama raised the hopes of thousands of Granite Staters when he called for raising the minimum wage in his State of the Union address.
His words should also raise the hopes of our state leaders. We’ve seen intense debate in our Legislature and town halls over the past few years about how to strengthen our economy after the Great Recession and help working people get back on their feet.
For thousands of Granite Staters living on the edge, the minimum wage determines whether their jobs pay enough to make ends meet. Yet it isn’t just workers who have a stake in the minimum wage. The small businesses they patronize and the communities they live in all stand to gain from reestablishing New Hampshire’s minimum wage. If our leaders are serious about encouraging New Hampshire’s economic development, they will consider reestablishing the minimum wage and indexing it to inflation.
Throughout the recession, Granite Staters relied increasingly on low-wage jobs to support their families. We lost nearly 6000 jobs between January 2012 and December 2012, according to the New Hampshire Economic & Labor Market Bureau. Alarmingly, the largest losses were in construction, healthcare, education, local government and manufacturing – all sectors that historically pay a living wage. And of the sectors that added jobs, one third paid an average of $10.85 an hour.
This is not an isolated trend. Contrary to popular belief, changing the minimum wage will not just impact teenagers and semi-retired people. As wages for working families have fallen and breadwinners come to rely on low-wage jobs to support their families, the minimum wage plays an increasingly critical role in determining whether a job gets a family out of poverty or keeps them in it.
Most businesses in New Hampshire are small employers whose wellbeing is intimately tied to the strength of their local economy and the fortunes of their customers. Lower wages mean fewer nights out, fewer ice cream cones bought for our children, fewer gifts at Christmas and birthdays. They mean waiting another year to fix the muffler on our car or replace our old winter coat. Ultimately, by paying their employees more, local businesses fare better.
It’s been argued that raising the minimum wage will force employers to reduce hours for their employees or lay them off. That this will happen to a degree large enough to hurt our economy is, at this point, simple speculation. A 2010 study from economists at the University of North Carolina, University of Massachusetts, and University of California-Berkeley found “no detectable employment losses from the kind of minimum wage increases we have seen in the United States”.
The reason for that is quite simple – a minimum wage means customers with more money in their pockets.
As Governor Hassan and our Legislature come to an agreement over the state budget, they will be asked to make a lot of tough decisions on how to foster economic development in New Hampshire with the resources we have available.
What they choose to fund is ultimately a reflection of their priorities. Yet they should keep in mind that the minimum wage offers a simple way to foster economic development without spending resources from the state.
Ultimately, the debate over the minimum wage comes down to the type of economy that we want. Do we want an economy that relies on subsidizing the employers who pay their workers the least? Or do we want one that recognizes that every worker’s toil is worthy of a living wage?
Jobs should keep Granite Staters out of poverty, not in it. It is time to reinstate the minimum wage and create a path to prosperity for workers and their families.