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Real wages in the real world

Bill Steigerwald
| Sunday, July 23, 2006 4:00 a.m.
Gov. Rendell was full of himself -- no small feat -- this month when he signed a law that will jack up the state's minimum wage $2 an hour to $7.15 by July 1, 2008. But in the real world, where only 25,000 of Pennsylvania's 3.3 million hourly workers earn the $5.15 federal minimum wage and about 108,000 earn $6.15 or less, Rendell's act of self-gratification will have little impact on entrepreneurs like Gary Matson. Matson is co-owner of My Brick Oven, a new wood-fired pizza joint located in a former coal mine portal on busy Banksville Road in Pittsburgh's South Hills. For Matson, the minimum wage -- federal or state -- is irrelevant. Like most small-business men, because of a competitive labor market he's never hired anyone for less than $7 an hour. Matson is far from alone. Last week, I went door to door to 54 businesses on Banksville Road from Potomac Avenue past Dormont Pool and in the Beverly Road business district in Mt. Lebanon. Depending on how you count them, there are between 25 and 37 job openings along that 1.2 mile stretch. Jobs a dollar or two or three above the current minimum wage are available now or in the near future at Radio Shack, Bado's Restaurant and My Brick Oven. Supercuts will pay $7.50 an hour, plus benefits, for a full-timer. Atria's Restaurant & Tavern is looking for seven to nine wait staffers or kitchen workers. Dormont Pool will pay $7 an hour to as many certified lifeguards as show up. Kuhn's supermarket is in its usual perpetual hiring mode. None of these jobs can single-handedly support a family or provide "a living wage" -- and isn't meant to. But virtually no business today can get workers by merely paying the minimum. Even Scoops, the Beverly Road ice cream emporium, starts inexperienced high schoolers at $6 an hour. From all the media attention paid to the minimum wage issue, you'd think every other household in America was dependent on one or two minimum-wage job holders. In fact, according to government statistics, in 2005 only 2.5 percent of America's 75.6 million hourly workers received the minimum wage or less. (It has fallen steadily since 1980, when it was 15.1 percent.) Half of minimum-wage-or-below workers are under 25. About 25 percent are 16-19 years old. Nearly half are part-timers. About three in four workers are employed in food preparation and service jobs (where they also get tips). And less than 20 percent live in households below the poverty line. Gov. Rendell and his kind get great political and cheap moral mileage from their perennial cries for using government power to raise minimum wages -- not to mention slavish coverage from their economically illiterate allies in media. Unions, of course, clamor for them for selfish reasons. Luckily, in the real world of pizza shops and drugstores, the minimum wage issue is mostly moot. Mandatory minimum wages -- state and federal -- still lag behind what a healthy job market already pays for most low-cost labor. That doesn't mean minimum wage laws still don't have unhealthy and often unseen economic consequences. As Thomas Sowell has pointed out, they make the less-skilled, less-experienced and less-desirable workers more expensive -- "thereby pricing many of them out of jobs." But since when have politicians cared about the laws of economics -- or the real world•


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