An older man standing by the road holding a cardboard sign: labor $6.00/hr. Who would advertise well below the official minimum wage?
Intrigued, I pulled over to talk with the man, who appeared to be in his late 50s. His story went as thus: retired with a small pension, living modestly, receiving some government benefits. Just wants to earn enough to protect his tiny nest egg.
So why not just get a regular gig at some local business?
Turns out “Sam” is kinda slow moving due to various injuries and ailments over the years. Also, his literacy and numeracy skills aren’t the best. “But”, he says, “I make up for it by being dependable and thorough”.
My short conversation with Sam made me think about the current discussion over the minimum wage. He could not compete in a labor market at the current Oregon rate $11.25 or even the previous $9.75 (to say nothing of the taxes that business may pay on top of that hourly wage). But $6.00/hr under the table makes him employable.
The famed business expert, Peter Drucker, once said something to the effect that companies don’t have employees, they have personnel expenses. An enterprise will only expend money on people who provide a return on investment.
“Good business leaders want their employees to have a decent life and want their employees to make enough money to afford to live,” noted Roy Cooper of the Economic Policy Institute. “They just don’t want to be put at a competitive disadvantage.”
A recent study by the Congressional Budget Office, entitled “The Effects on Employment and Family Income of Increasing the Federal Minimum Wage,” looked at the affect of raising the wage $7.25 to $10, $12 or $15 per hour by 2025. The conclusion was that increasing the federal minimum wage would have two major impacts on low-wage workers: earnings would increase for many, which would lift some families out of poverty. However, other low-wage workers would become jobless, their family income would drop.
If the minimum wage pushes people out of the workforce, what are we to do about those who cannot produce a return value on the minimum wage? Will they be condemned to a life outside the mainstream economy?
Are we to see an explosion of people openly offering themselves as available for work below the minimum wage? Will the government respond by arresting those who dare stand out on a highway advertising themselves as such? Will there be sting operations where police will lure someone needing help cleaning out their basement
I tried to talk to Sam about some of the larger questions, but he was having none of it. All he wanted was to do a little work, collect a little money then go home to his cat and watch some college football.
I gave Sam $6 for his time.