To help small businesses, lawmakers should loosen regulations
This week is National Small Business Week. And to celebrate small businesses, a bunch of events have been planned around this topic in Minnesota. As the Department of Employment and…
KSTP had a story this week titled ‘Metro Transit Turns to Apprentice Program to Address Bus Driver Shortage‘.
I’ve written previously about how Metro Transit is having trouble finding people to come and work for them at wages of $19.94 an hour. This is what you might expect to see given Minnesota’s alleged ‘labor shortage’. As labor demand increases relative to labor supply, the price of labor – wages – will increase.
As we testified before the Joint Economic Committee of Congress recently, starting in February there has been a notable uptick in wage increases in Minnesota, as Figure 1 shows (nominally, at least, I’ll say more about that tomorrow).
Figure 1: Average Hourly Earnings of All Employees: Total Private in Minnesota, Dollars per Hour, Monthly, Seasonally Adjusted
Source: Bureau of Labor Statistics
So, in Minnesota’s labor market, we have a demand increasing relative to supply, wages rising in nominal terms, and jobs going unfilled at $19.94 an hour. Why, then, do we have a campaign for Saint Paul to follow the bad example of Minneapolis and raise its minimum wage to $15 an hour? As I wrote last month,
If you are unsatisfied with your wage of $9.65 or $7.87, you can literally double that by going to work for Metro Transit. Instead of gathering in public from time to time, chanting and waving a placard in the hope that a politician will wave a magic wand, just fill in an application.
What is stopping you?
It may be the case that the workload of a Metro Transit bus driver is more than the worker currently has or that the schedule doesn’t work for them in some way. But this shows that there are benefits to minimum wage work in terms of flexibility and workload which offset, to some extent, the lower pay and benefits.
It may be that the worker currently on $9.65 doesn’t have a driving license and would need to get one to apply. This just makes the point that we should expect a job requiring more skills to pay more. It also begs the question of why you would expect an employer to pay you the higher minimum wage if your skills haven’t increased. And anyway, Metro Transit will train you.
The bottom line is that, if employers can’t hire at $19.94, there is no need at all for a legally mandated minimum wage of $15.
John Phelan is an economist at the Center of the American Experiment.