Georgia’s elections last year took on an unusual, perhaps unprecedented, national tinge as Brian Kemp and Stacey Abrams tried to rally supporters based on their respective affinity or repulsion for President Donald Trump.
It should come as no surprise, then, that some of that nationalization is showing up in this year’s legislative session. Already, Georgia Democrats are staging their biggest effort yet to demand an expansion of Medicaid as allowed under Obamacare. I’ve explained in previous columns why that’s the wrong way to help lower-income Georgians get meaningful access to health care, and I’ll do so again soon.
But another progressivist idea that’s made its way to Georgia is the notion of raising the state’s minimum wage. Today, Georgia’s minimum wage in certain cases is only $5.15, below the federal level of $7.25 set in 2009. Democrats in both the House and the Senate have filed bills to raise it immediately to $15.
Examples such as Seattle illustrate why this is a bad idea. There, even though the cost of living is already 51 percent higher than in Atlanta, not to mention rural parts of Georgia, a rise even to $13 an hour has lowered the take-home pay of many hourly workers. Those who weren’t working many hours before the increase have seen their hours cut, or their work opportunities disappear altogether, according to researchers at the University of Washington.
But we need not look that far. Georgia’s own experience demonstrates the folly here.
It’s important to understand a couple of key facts.
First, the real minimum wage is zero: If a job doesn’t exist, it doesn’t matter how much the employer would have to pay if it did exist.
Second, the minimum wage is a relative non-factor in the labor market when the economy is growing. Only when the economy is struggling does it affect many people – and then, the result may well be to keep them out of work.
Consider data from the federal Bureau of Labor Statistics. In 2008, just as the Great Recession was beginning, only 1.8 percent of all Georgia workers (about 76,000 people) earned the minimum wage or less. That proportion grew to 3.6 percent in 2009, 4.2 percent in 2010, and 5 percent in 2011 as the economy strained to recover.
It has trended downward since then, hitting 1.6 percent in 2017, the latest year for which data are available.
From 2008 to 2011, the number of Georgians working at or below the minimum wage rose by about 120,000. If that sounds bad, consider the 221,000 Georgians who stopped working at all. For them, the minimum wage truly was zero.
Since the trough of 2011, Georgia has added more than half a million jobs – despite shedding 123,000 jobs at or below the minimum wage. A growing economy is the best way to address low wages and inequality.
It’s also worth noting who holds minimum-wage jobs. Nationally, the BLS reports that in 2017 workers ages 16 to 19 were six times likelier than those 20 and older to have minimum-wage jobs.
Despite making up less than 6 percent of all hourly workers, these teenagers represented more than 21 percent of minimum-wage earners. Less than 2 percent of workers at least 30 years old worked at or below the minimum wage.
All of this points to a simple but clear truth: Minimum-wage jobs are the first, temporary rung of the economic ladder. We want to make it easy for people to get on the ladder and then climb, not boost a few people up a rung by bumping others off the ladder entirely.