Minimum wage debate: Utahns should consider alternative ways to lift families out of poverty.

AuthorGochnour, Natalie
PositionEconomic Insight

Many times in public policy we share a common goal, but choose a different path. This is the case with the minimum wage debate. Utahns share a sincere interest in helping low-income families secure a more stable future. Some policy makers chose the minimum wage policy path to lift these families out of poverty. Other people, like me, choose a different path. I favor enhanced training opportunities and the earned income tax credit as superior policy interventions.

With California, New York and other jurisdictions pursuing a $15 minimum wage, it's time to consider the right policy intervention for Utah.

The economic arguments

The minimum wage in Utah is currently pegged to the national rate of $7.25 an hour. Unlike some states, we do not set a state rate that is higher than the nation's. Approximately 28,000 Utahns receive the minimum wage; that's fewer than 4 percent of Utah wage and salary workers, and many of them are restaurant workers who receive far more because of gratuities.

The economic argument against a minimum wage is straightforward. Labor is a commodity just like anything else. If you increase the price, less is consumed. It follows then that when the federal government fixes the wage rate, employers hire fewer workers.

I'm not a "theory purist" on this issue. While I believe employers respond to incentives and many will hire fewer workers when faced with a non-market wage, the empirical evidence shows mixed results. Some credible studies have actually shown positive effects from modest increases in the minimum wage, in part because of greater employee retention and productivity.

Others have shown the minimum wage hurts the very people it is supposed to help by reducing employment opportunities for low wageworkers.

The truth is economists have argued over the impacts of minimum wage hikes for decades. With the large increases now contemplated all around America, these debates will continue and intensify.

Alternative interventions

My biggest quarrel with the minimum wage is that we have better policy options to accomplish the goal of lifting low-income families out of poverty. These policy options are more targeted to those in need, more long-lived in terms of their impact, and more broadly shared among taxpayers.

My preferred policy intervention is investment in public and higher education that improves quality and access. We live in a globally competitive and technologically advanced world. Those with more talent, education and...

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