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Minimum wage not as simple as just increasing it

Minimum wage not as simple as just increasing it

Fred Birnbaum
July 17, 2014
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July 17, 2014

It is early in the campaign season, but not too early to ask the major party candidates for governor to stake out positions on key policy issues that matter to Idahoans.

Many Idahoans are struggling to make it financially so naturally the fact that many make only the minimum wage is likely to be an issue for the fall campaign. At first glance this could come down to a debate on whether to raise the minimum wage, and then index it to inflation.

Let’s hope that the candidates do a deeper dive on wages and jobs than simply staking out positions on the minimum wage. Wages are input costs to businesses and as wages increase so will prices absent offsetting gains in productivity. Price increases will offset the purchasing power gained by those wage increases.

Productive investment and technological advancement reduce the costs of goods in an economy. We can see this with the reduction in prices for consumer electronics like laptop computers and flat screen TVs. Without productivity-driven gains in purchasing power, simply forcing up wages will not increase living standards over the long term.

A related issue is the types of jobs available in Idaho. Who will go to bat for Idaho’s resource-based workers? An example is the timber industry. Timber industry jobs historically paid well above the minimum wage but have largely evaporated given the 90 percent reduction in timber harvests in this state. This reduction is largely the result of federal land use policies. Supporting the rejuvenation of the timber industry ought to be a key policy position of any candidate for governor in Idaho who cares about wages.

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