As cities around the country have begun to raise their minimum wage to $15 an hour, people think they have found the elixir for ending poverty. As Vice President Biden has said, “No one in America should be working 40 hours a week and living below the poverty level. No one.” However, higher minimum wages actually keep workers from feeling the need to further their education, trapping them in low-tiered jobs, thus limiting social mobility even more than under the current system.
If the government mandates that all jobs pay $15 an hour, more adult workers will likely be satisfied with jobs with limited advancement opportunities. Why suffer through the loss of family time and valuable financial resources to confront the rigors of school?
Yes, what Biden and others call a “living wage” could lift those households out of poverty, assuming they still get 40 hours a week – an uncertain assumption. But they would still be susceptible to the whims of the job market.
Even if a higher wage temporarily boosts the lifestyle of workers living on the edge, it remains a crude tool that does not address the underlying problem. So how can we address the disparity in skills between those that prosper and those who barely survive?
I’m an economics professor at Darton State College in Southwest Georgia, and I observe the daily challenges faced by local citizens as they struggle with the vagaries of poverty. Unstable households, low-achieving schools, and rampant crime all contribute to a poverty rate that is 34.2 percent here – more than double the national average. Too often, we try to rely on the quick fix of the minimum wage to solve all of our social ills.
Suppose we are successful in getting a “living wage.” Isn’t it likely that low-income workers will then settle for bottom-rung jobs that will not improve their skill development? They could be stuck in a dead-end job that may or may not exist in the future, with limited opportunities to land a job in another field.
Instead, it would be more fruitful to encourage those workers to pursue further education and training. That way, we can enhance their workforce skills and cushion the blow that happens during economic downturns.
Ironically, a low minimum wage can serve as an impetus to more education. Think about it: when individuals consider their quality of life unacceptable, they seek better options.
One of those options could be attending college to study new skills where they show promise. Rather than settle for a grocery-clerk job that might cease to exist within the next decade with the influx of self-scanners, they could enroll in a community college to learn about medical lab technology. Our population is aging, so the medical industry is desperate to find qualified talent.
If their high school background is not suited for completing a college degree, then they could pursue training to achieve certification in welding, or a similar skill. With an inflated minimum wage, they would likely not pursue those options and be stuck in the same job, if it even exists in the long run.
Another consideration is the impact on youth. Minimum wage jobs are traditionally a good starting point for entry into the job market. Teenagers gain valuable experience on being timely and responsible.
Making low-skilled occupations more expensive to employers can price teenagers out of the marketplace. Today, national teenage unemployment is 18.1 percent, which is nearly quadruple the adult unemployment rate of 4.8 percent.
Research shows that high youth unemployment leads to diminished earning potential later on. By not gaining valuable work experience early, they might face a rude awakening when they become an adult and lack necessary employment skills such as dress, manners, and punctuality.
A higher minimum wage would fail to address the skills gap where low-income Americans are struggling to keep pace with the changing requirements of a new economy. Whereas strength, effort and endurance had value in the past, automation and technology has been placing a greater premium on critical thinking and specialized skill sets.
To achieve a more inclusive, productive economy, we must look past the living-wage idea and implement a more sustainable strategy to assist the American worker.
Ideally, more Americans should pursue college, since that is what future jobs will require. By 2020, 65 percent of all occupations will likely demand some education beyond high school. With only around 30 percent of adults now possessing college degrees, a crisis is developing. If we do not address it soon, the living standards of all Americans will be at risk in a global economy.
Prescribing a living wage is not the remedy. Instead, it is actually the kind of antidote that spreads rather than contains the disease it is trying to cure.