How the ‘Fight for $15’ Movement Can Undermine Those It Aims to Help

What’s a better solution — higher wages at the cost of jobs, or more jobs with lower wages? If you’re interested in seeing more people working, the latter is the better option. But it’s not just about the number of jobs. That’s why several economists question the logic of the “Fight for $15” movement or other minimum wage arguments.

“While boosting wages for workers is critical, helping workers retain their jobs and stay on the income ladder makes more sense for the economy.”

That’s what economist Aparna Mathur says in a recent article on wage hikes. Even the nonpartisan Congressional Budget Office found that raising the federal minimum wage to $10.10 per hour could result in the loss of 500,000 jobs.

Mathur notes that several localities aim to increase the minimum wage in the next few years, and warns that the people who are going to feel the impact are the very workers who would benefit from not being paid a mandated minimum wage.

Most policies of any kind involve trade-offs, and minimum wage hikes are no exception. When the government mandates that employers must pay minimum wage workers more — i.e., the hike is not because of any increases in productivity or skills — employers will strategize about how to recover the added costs. Can they pass them on to their customers? Should they invest more in automation? And of course: Should they decrease the size of the work force?

Mathur acknowledges disagreement in the economic models on the impact of minimum wages. It’s more than just the number of jobs available, the minimum wage is a variable with major reverberations to the overall economy and how work is conducted.

She points to the results of a major recent study by New York University. The study found that raising the minimum wage had a small impact on the overall drop in hiring, but a much greater impact on the amount of work each worker is doing.

Hours worked fell sharply, with reductions as large as 3% across all workers and 25% for the lowest-wage jobs. Presumably, the study’s authors wrote, some of the reduction was caused by employers economizing on labor. However, they also wrote, hours worked also likely fell because employers hired more productive workers.

And what’s the outcome for managing less productive employees? Automation, of course. The dreaded “robots.”

Many stores and fast-food restaurants are already planning this transformation. For example, McDonald’s plans to move away from cashiers to touch-screen kiosks nationwide and to allow mobile ordering rather than pay an employee $15 an hour to bag French fries. Wendy’s is considering a similar move. Walmart already is automating many positions that employ hourly workers.

Mathur says if government policy really wants to help low-wage workers, it could try more creative approaches, like the Earned Income Tax Credit program.

A targeted program with no risk of job loss, the EITC has been proven to lift people out of poverty, and it is the best way to boost incomes for poor households.”

At the same time, encouraging upgraded skills for workers through greater investments in on-the-job training and paid apprenticeship programs for younger workers would allow for greater upward mobility even for workers starting off in minimum wage jobs.

While boosting wages for workers is critical, helping workers retain their jobs and enabling them to move up the income ladder is even better. The risk of job loss that comes with a minimum wage hike threatens the ability of these workers to get on that ladder. States that are on track to approve such an increase should proceed with tremendous caution.

Wage Hikes: Proceed with Caution

Filling Manufacturing Jobs: How to Match Skills to Demand

You’ve probably heard by now that automation and off-shoring are responsible for the decline in manufacturing jobs in America. But in reality, manufacturing jobs are still a major contributor to the U.S. economy, and they’re not going anywhere anytime soon.

Manufacturing jobs are defined as the creation of products from components or raw materials. They range from bakers to refrigerator makers. Pretty much everything that is made into a good from something else is considered a manufactured product.

Manufacturing employment, which peaked at 19 million in the 1980s, now stands at around 12.2 million. At the same time, the U.S. population is growing. You’d think that would mean the role of manufacturing jobs is decreasing as a percentage of the economy. But while manufacturing jobs may represent only 9 percent of the U.S. workforce, they account for 18.2 percent of global goods, and contributed $2.17 trillion to the U.S. economy in 2015. They provide good salaries, with workers earning on average more than $79,000 in pay and benefits.

So what’s the issue? Why is there so much talk about the loss of manufacturing jobs?

The reality is that 322,000 manufacturing jobs are available and ready to be filled right now.  The National Association of Manufacturers predicts that over the next decade, 3.5 million manufacturing jobs will be created, but 2 million of them will go unfilled.

The types of manufacturing jobs have changed over time, and have become much more sophisticated. Manufacturing is not just about widget production and Tupperware. Manufacturing involves biotechnology, carbon fibers, and nanotechnology, among other advanced industries.

Upgrading people’s skills is a definite necessity, but re-training is not as easy as just teaching workers how to fix robots. The real issue, according to economist Aparna Mathur, is recasting manufacturing as a desirable profession.

A survey on the Public Perception of Manufacturing shows that while most Americans perceive manufacturing as the backbone of a strong domestic economy, few parents want their children to work in this industry, and manufacturing is the last career choice for people between the ages of 19 and 33.

All of this suggests that to make manufacturing great again, we need a two-pronged approach. We must encourage workers to upgrade their skills with training in math, science and computing. For younger workers, paid apprenticeships with companies could produce big results. But aside from the skills gap, we also need to tackle the “image-gap”—the unwillingness of some workers to take up these jobs because of their inherent bias against working in jobs that they perceive as similar to the factory jobs of the past.

Bringing jobs back from overseas makes for a promising campaign pledge. But filling domestic jobs through skill upgradation and changing the image of manufacturing to make it a more appealing career choice can be a more practical and achievable jobs policy.

In essence, the four-year college may not be the answer to good careers for many young people. Manufacturing jobs require more than just studying the philosophers and psychology, they require learning skills that are not traditionally taught in liberal arts studies. And with college costs spiraling out of control, that alone could make a career in manufacturing a more attractive pursuit, if approached with the right attitude.