The progressive case against a minimum wage increase

August 28, 2015 12:20 am • By

Supporters for a minimum wage hike increase react to the debate on Tuesday, Aug. 25, 2015, as they watch from the upper gallery in the aldermanic chambers of City Hall in St. Louis. Photo by J.B. Forbes, jforbes@post-dispatch.com

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Many supporters of a higher minimum wage like to imply that their opponents are conservatives who put corporate profits above poor people’s lives.

That caricature is far from the truth. Just ask Antonio French, who has built a reputation as a progressive, even a firebrand, in six years as a St. Louis alderman. He spent many hours with Ferguson protesters last year, and he has fought the business establishment on key development issues.

French voted against the minimum-wage bill the Board of Aldermen advanced Tuesday, and he’ll oppose it again when it comes up for a second vote Friday. In a phone conversation, he described his stand as both principled and practical.

“It would have been an easy vote for me to vote yes,” French told me. “I don’t have a lot of businesses in my ward. I do have a lot of poor folks who think the minimum wage is a great idea, but I know it’s not.”

The bill would raise St. Louis’ minimum wage to $11 an hour by 2018, a 44 percent increase over the statewide minimum of $7.65.

Such a steep climb, French worries, would price many young people out of the job market.

In the city of St. Louis, the unemployment rate for 16- to 19-year-olds is 34 percent. For 20- to 24-year-olds, it’s 16 percent. Raising the minimum wage amounts to knocking out the lowest rung of a career ladder that’s already out of reach for nearly 2,400 young city residents.

French has seen the effect that an $8- or $9-an-hour job can have on young people’s lives. He fears that if the minimum goes to $11, employers will hire older, more experienced workers rather than taking a chance on a kid.

Economists refer that as labor-for-labor substitution. It’s hard to see in big-picture statistics, which may be why some studies find that raising the minimum wage doesn’t eliminate jobs in the short run.

William Wascher, a Federal Reserve Board economist, has done extensive research on the effects of minimum-wage increases. He’s convinced that they do reduce employment over time, and he’s even more certain that they harm the least-experienced workers.

“Minimum wages do more harm than good,” Wascher said. “They reduce employment opportunities for low-skilled workers, and they don’t appear to do much to reduce poverty.”

The harmful effects that show up in studies of statewide or nationwide increases will be more severe in an area as small — and with as much concentrated poverty — as the city of St. Louis.

If employers move outside the city limits to avoid the minimum wage, they’re less likely to hire the young city residents whom French is hoping to steer away from the drug trade. He says a part-time job paying $200 a week can keep a young person off the streets and probably away from prison or an early grave.

French, who has an MBA from Washington University, knows some of those $8-an-hour jobs won’t exist at $11. He respects the moral argument some of his colleagues make about a living wage, but thinks it’s out of touch with the reality he sees in the city.

“I’m just trying to put poor folks to work,” French says. “The biggest problem we have is unemployment.”

The logic is simple, even though it seems beyond the grasp of other self-styled progressives. If a policy is going to make your biggest problem worse, it’s a bad policy.

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