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The more typical minimum wage earner is a peppy teen-ager working 10-15 hours per week, living as a family member with a household income in excess of $60,000 per year. This minimum-wage earner is grateful to gain the work experience necessary to launch their budding career aspirations while paying for life's incidentals like going to the movies and the mall.
The term "minimum wage" is misleading. It should be called "starting wage," or "entry-level wage," because the majority of those whose entire compensation is based on this wage are under 21, entry-level, inexperienced workers hoping to gain the necessary experience that will allow them to get a raise or a different job with greater responsibilities and higher pay.
Those who prove themselves to be hard-working, responsible workers most often receive an increase within weeks of their start date. As these workers improve their productivity, learn new skills and demonstrate their reliability and capabilities, their wages typically are increased. This incentive-based wage increase tends to produce a stronger, better-trained and more motivated employee. Employers are able to use the minimum wage as a training wage tool where they can pay a minimum allowable amount to offset the costs associated with training the new employee.
The logic behind proposals to increase minimum wage (HB56 and the governor's bill) is also misleading. In order to successfully pitch the increase, proponents must paint the misleading image of a weary single mother of three children who works as a clerk on minimum wage and struggles each day to make ends meet. While this person may indeed exist in some markets, they are far from the majority of minimum-wage earners. Instead the more typical minimum wage earner is a peppy teen-ager working 10-15 hours per week, living as a family member with a household income in excess of $60,000 per year. This minimum-wage earner is grateful to gain the work experience necessary to launch their budding career aspirations while paying for life's incidentals like going to the movies and the mall. As for the real life mother of three on minimum wage, she needs training and education far more than she needs an extra 50 cents an hour. Like the old adage, catch me a fish and I eat for a day, teach me to fish and I will eat for a lifetime, true minimum-wage earners need to be taught the basic skills that will allow them to progress in their career over their lifetime.
From the business owners' perspective, minimum wage increases represent one of many rising costs of doing business. With restaurant industry profit margins averaging 37 percent, business owners must compensate for increased costs in one area by decreasing costs in another. So rather than helping those it purports to help, raising the minimum wage forces businesses to find other ways of reducing costs. This invariably means finding cheaper alternatives to the least skilled jobs. Many food service industry business owners have achieved labor reductions by replacing jobs with pre-processed food or automated preparation. It is critical to understand the impact of minimum wage often results in the elimination of the lowest paid and the least skilled.
An opportunity credit and training wage, coupled with a tip credit, provide the tools that employers need to invest in the training of entry-level employees,so they can be cultivated into superior service providers. Working one's way up through the ranks is a time-honored tradition that has earned its place in our society because of the caliber of professional it yields. There has to be a bottom and, at the same time, it has to be low enough so that employers can justify the added expense of training the novice worker.
Inflating the minimum wage serves only to cut the low rungs from the employee training ladder, making it profoundly more difficult for entry-level workers to gain that all-important first job experience.
Let us focus on the goals of 1) developing a skilled workforce which is qualified to receive higher wages and 2) providing incentives for employers in the form of opportunity credits, so that those most in need of experience can be developed quickly into the higher-paying ranks. Throwing money at the problem in the form of an extra 50 cents per hour may seem like a good start, but the truth is, it hinders an employer's ability to do what's best for the very group it is intended to help; entry-level workers.
Karen Rogina is the executive vice president of the Alaska Restaurant and Beverage Association based in Anchorage.