Democrats not being honest with Nevada minimum wage hike
November 5, 2014
H illary Clinton, campaigning in Massachusetts last month, told her audience that raising the minimum wage would not kill jobs. Sounds like she has been drinking President Obama's Kool-aid, but she's not alone in that.
Nevada State Senator Tick Segerblom (D-Las Vegas) has announced his intention to introduce a bill which would increase Nevada's minimum wage to $15 per hour. Why is it that Democrats never seem to have taken basic courses in economics?
If, as Segerblom proposes, Nevada passes a law more than doubling the minimum wage, a lot of low skill workers will lose their jobs, many replaced by automation. More on that later on. The effect on all of us would include cost-push inflationary pressures, making it cheaper to go to Kings Beach for a burger.
Another consequence of government tinkering with the minimum wage was spelled out in Nevada Policy Research Institute's recent release authored by Chantall Lovell.
Her research found that poverty levels are not so much a function of what the minimum wage is but whether a person even works.
She wrote: "National statistics show that having a job is the best way to escape poverty. Of people ages 16 and older living beneath the poverty line 67 percent do not work while only 9 percent worked full time in year round jobs … only 4 percent of those making a minimum wage are single parents who work full time" she concluded: "Making the situation worse for (low skill) workers is that technology has made it possible for employers to simply eliminate entire job categories previously filled by entry-level workers."
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After all, who has not called for tech support and been connected to Bangladesh?
That brings us to a follow-on discussion about the plight of the low skill worker being priced out of the work place by meddlesome governments setting a minimum wage higher than the market.
If Google can create a driverless car, there isn't much in the way of low skill labor that cannot be replaced by automation and/or outsourcing.
Oxford University of England recently published a study titled: "The Future of Employment." The authors concluded that "a lot of low skill workers need to acquire creative and social skills to stay competitive in the labor market in the future."
That certainly hits home in a tourist economy such as Nevada's. Today's unskilled workers had better start thinking about getting an education to increase their value to potential employers.
Within 10 to 20 years, between 50 percent and 70 percent of all low skill jobs will be replaced by robots or other technology according to the Oxford study.
The study goes on to identify metropolitan areas that have a large share of low skill employees at risk of job loss including Corpus Christi, Texas, Fort Meyers, Fla., and Las Vegas.
It contrasts these areas with places dominated by high skill jobs (requiring bachelor's degrees or higher) such as San Jose, Calif., Durham, N.C., and Boston which are not at risk of serious job loss due to advancing technology.
The Oxford study points out that it is currently feasible for a lot of low skill jobs to be automated, but the infrastructure and machinery to allow that to happen is probably more expensive than continuing to pay people $8 to $12 per hour.
To the extent that Clinton and Segerblom succeed in getting government to mandate uneconomic wage rates, they will accelerate the automation process and throw people they claim to be trying to help out of work.
The study concludes that engineers, scientists, web developers, artists, lawyers, business executives, nurses and doctors ae among the safest jobs.
David Autor, an MIT economist, says that as computerization and automation erode high skill jobs those workers will compete for the low skill service jobs and push the least educated out of the work force. Isn't that exactly what we saw during the recent recession?
Darwin was right. Clinton, Segerblom, Obama and the others are misleading the public with their talk about raising the minimum wage.
Jim Clark is president of Republican Advocates. He has served on the Washoe County and Nevada State Republican Central Committees. He can be reached at email@example.com.