Bozeman Minimum Wage Shuts Out Entry Level Workers
The Bozeman City Commission is considering imposing a minimum wage for the city of Bozeman.
The minimum wage was never intended to be a living wage. It was designed to allow entry-level workers into the workforce by providing a level playing field during the depression.
Employers at the time only needed warm bodies to do mostly manual labor. So the lowest pay possible was the order of the day.
You didn’t have to be smart, or even speak English.
Today’s Minimum Wage
Before the days of wage and hour, OSHA, EEOC, and other regulations, workplace protections were needed.
Today the minimum wage is not dictated by manual labor alone. Most workers today need math, reading, and computer skills even for entry-level jobs.
Today’s employers are looking for the most skilled and productive workers, not the cheapest warm bodies.
The Unintended Consequences of Minimum Wage
Your social security payments are based on your 35 most productive years of work. An increased minimum wage artificially and negatively affects hiring that would ordinarily take place were a higher minimum wage not imposed.
Every day an entry-level worker is shut out of the workforce due to increased payroll the longer it will take to move up the income ladder at an early age.
The most productive 35 years are usually between the ages of 24-59. The entire Social Security fund is expected to run out of money completely by 2034.
We currently have a workforce participation rate of 62.9 percent
It has been in steady decline since 2007.
Increasing the minimum wage even by a few cents can have a profound effect on payroll costs and social security with so many not in the economic system.
This feel good proposal only exacerbates the problem rather than fixing it as so many believe.
The higher the minimum wage the harder employers will look for experienced workers already being paid that amount.
It’s too expensive to train an entry-level employee when you can hire someone already making more.
That’s why the average hourly rate of pay in February was $25.35 per hour.
Every day a new worker is shut out of the workforce the lower their overall lifetime income will be. The sooner they can enter the workforce, and gain skills and expertise, the more productive they will be over their working life.
Cost to the Employer
Check out the picture above. $12.25 per hour and 5-9 sick days each year. So a small business with 5 employees that offers a week of paid vacation puts out $2,940 dollars per year. Plus another $2,450 to $4,410 in sick pay for zero work production.
How is that cost recouped by the employer?
Some Final Thoughts
The other unintended consequence of a minimum wage is that it hastens the demise of the Social Security system. We are told the system will be broke by 2034 unless changes are made.
If this were true then wouldn’t it make sense to have more people in the workforce making any kind of taxable income to extend and strengthen social security?
What if a high school kid is happy to work four hours after school for $3 and hour for date money? Wouldn’t that person learn valuable skills to take to the next job and get a jump on that 35-year income scale?
Wouldn’t it be better to enter the 24-59-group making $20 and hour rather than $11?
What about the effect on the surrounding communities. Would people quit jobs in other communities to come to Bozeman for higher wages. Wouldn't this bring the standard of living for nearby communities at a competitive disadvantage for skilled workers?
Would prices drop in other cites due to lower labor costs than Bozeman?
Seems like the only choice with a forced minimum wage is not get paid now and get paid even less later.