It’s Time To Rethink The Structure Of Minimum Wage

For a salary earned by just 2.3 percent of Americans, according to the U.S. Bureau of Labor Statistics, states manage to trip all over themselves in setting their minimum-wage rates.

This is mainly caused by self-styled progressive groups, whose members haven’t earned a minimum wage since their first job a decade or two ago, taking it upon themselves to advocate for a so-called ‘living wage’ for people looking for their first jobs from employers willing, but often unable, to offer them a foot in the door.

Make no mistake, the minimum wage is mainly earned by the very young. As BLS informs, “Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less.”

California found itself fishing around for a minimum-wage rate that could quiet the loudest voices and came up with a six-year, two-part plan that will end after 2023 at $15 an hour. Right now, it’s $10.50 an hour for employers with 25 or fewer employees and $11 for employers with 26 or more employees.

Because some clients of Kabateck Strategies are affected by increases in minimum-wage rates, we keep an eye on what other states do with their rates. Oregon’s is the most intriguing for sheer political, not economic, accommodation. It has three different rates for three geographic areas and links all rates to changes in the U.S. Department of Labor’s Consumer Price Index.

As of July 1, 2018, the minimum-wage rate in Oregon increased to $12 an hour in the Portland metro area, to $10.75 an hour in the “standard area,” and to $10.50 an hour in the “nonurban zone.” And by the way, even tipped workers are paid this rate and there is no tip credit for employers.

Idaho’s minimum-wage rate is one worth keeping an eye on for state policymakers everywhere. Quite simply, the state’s is linked to the federal government’s minimum-wage rate, currently $7.25 an hour, and Idaho prohibits its county and city governments from establishing their own rates.

There’s something nicely job-creating, paperwork-eliminating, regulation-relieving, and economy-boosting about the Idaho method.