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New York Times Room for Debate


Making Low Wages Livable

December 04, 2013

By Diana Furchtgott-Roth

Low-wage workers need more job opportunities, not a higher minimum wage. A minimum wage hike would harm employment opportunities of teens and low-skill workers. Fewer than 3 percent of American workers make the minimum wage, but these entry-level jobs are the first rung of the career ladder.

Doug McMillon, who will take over as Walmart C.E.O. next February, started out as a teenager unloading trucks at a Walmart distribution center.

Fast-food workers want the minimum wage more than doubled, to $15 an hour. President Obama wants an increase to $10.10. If you had to pay $10.10, or $15, tomorrow for a service for which you pay only $7.25 today would you buy as much of that service?

Rather than raising the minimum wage, Congress and the president need to make it easier for firms to create jobs so labor would be in greater demand and workers would have more ways to move up. Job openings and hiring are at historic lows, Labor Department data show. American employers are finding it more efficient to invest in capital rather than labor. Multinationals are creating far more jobs overseas than in America.

Until our government stops doing all it can to prevent hiring, low-wage workers will find it difficult to get jobs. Here are three suggestions:

Fix Obamacare. If an employer’s payroll climbs above 49 workers, he will risk a $2,000 annual penalty per worker from the I.R.S. if he does not offer adequate health insurance. Moving from 49 to 50 workers can cost a firm $40,000 a year enough for a new hire. Small businesses are the engine of job growth, and if they can’t grow, workers are in trouble.

Lower Taxes. America has the highest corporate tax rates in the world, and small business taxes now exceed 50 percent in many states. That’s why many firms locate elsewhere. U.S. nonfinancial companies are holding $1.7 trillion in liquid assets overseas. With lower taxes these assets could be here, creating jobs.

Streamline regulations. The Environmental Protection Agency is putting the coal industry out of business. The Energy Department is slowing up energy exploration permits. Laws such as Dodd-Frank and Sarbanes-Oxley are driving companies overseas. If some workers cannot land a first job because their skills are worth less than the minimum wage, they will not be able to work their way up the career ladder.

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