The Folly of Mandating $15 Wage

Ultimately, Hurting Seniors

The Advocates have submitted petitions to “raise the Nebraska minimum wage to $15”. The petition efforts go too far. Government should not be mandating wages or pay raises, but this petition does both and goes on for years. Also, dollar-to-dollar, it is a tax hike. More payroll taxes have to be collected on higher wages so the real winner is government. Employees and employers should determine wages, not the government.

The Advocates are not economists. The Raise the Wage Nebraska group is full of special interest groups (https://raisethewagenebraska.org/about/).

The Advocates do not understand the impact of mandated higher wages on a digital economy. At $15 an hour, Nebraska will have the highest wage in the country (https://www.dol.gov/agencies/whd/minimum-wage/state). This will force many digital jobs out of Nebraska. Many of these are already at risk of being lost to other countries, including Ireland, Mexico, and the Philippines. Large corporations can do this at the flip of a switch and at no additional cost. You do realize when you hit 2 for Spanish, your call is likely transferred to a Mexico call center, right? (https://www.outsource-consultants.com/outsourcing-countries/call-centers-in-mexico/) Maybe this petition should be called: Make Mexico Great Again!

More importantly, this hike will adversely impact working senior citizens. Social Security benefits can be cut or the working senior citizen may have to cut back working hours and lose work benefits. (https://www.aarp.org/retirement/social-security/questions-answers/working-while-collecting-social-security.html and https://www.investopedia.com/retirement/social-security-changes/)

The problems with minimum wage are never experienced by the Advocates. They see mere numbers and fail to see the discrimination which results from government-mandated wages. Businesses can put limitations on hiring practices such as setting the number of hours required at 25 hours which discourages students from getting the job or an employer can give more hours to productive employees while cutting hours of others. Also, with mandated wages, employers often cut back on benefits.

Also, technology can easily replace workers. Before Nebraska raised the minimum wage to $9, I could walk to the local grocery store and there were no self-checkout stands. After the $9 wage took place, grocery stores consolidated and all of them have implemented numerous self-checkout stands to cut costs. I have to drive to reach the grocery store, where I did not have to before.

There is also the ugly reality of the fact there are way too many people whose work is not worth $15 an hour. The result of a government-mandated wage is higher prices for bad service from unworthy workers. At the same time, many are merely left unemployed, become homeless, and panhandle on the street. If the government stopped mandating wages, there would be very few homeless people and virtually no panhandlers.

One other problem with this petition is it will condition employers not to offer pay raises. I have heard this from minimum wage workers over many years. They often do not get pay raises merely because their employer assumes the government will do it anyways. Some employers will provide an extremely modest pay raise of 5 to 10 cents, but no more. Some senior citizens really love these jobs as they meet people and the pay does not interfere with their Social Security benefits. The reality is: the wage needs to match what the work is actually worth instead of an arbitrary number set by activists seeking government mandates.

Many will pull out studies saying this or that, but they miss the gaming of numbers. Changing a number does not increase worth or productivity. You may as well mandate moving the decimal point one more digit to the right so everyone feels they are ten times richer, but they are not. No matter what, the economy will adjust to your new numbers as it does not care.