About this time last year the debate over raising the minimum wage was pursued vigorously by Plastics News readers on this page. Most of those who expressed a view on the topic insisted that bumping the hourly rate up to $4.75 from $4.25, effective Oct. 1, 1996, would increase unemployment and bankrupt employers.
That isn't what transpired. The country is now on the verge of Phase II of the graduated increase in the minimum wage, to $5.15 Sept. 1, and the national hiring outlook is not just good, it's excellent.
According to a survey just conducted by Manpower Inc., nearly a third of companies plan to increase their payrolls during the third-quarter. That is the strongest hiring statement by business since 1988, says the Milwaukee-based staffing company.
In many parts of the country, unemployment is the lowest it has been in 20 years, and employers are struggling to find and retain workers. Inflation is not a problem; the economy continues to grow and the businesses hiring most aggressively are those that often pay minimum wage — restaurants and retailers, such as department stores.
So what happened? One theory advanced by a number of economists is when the minimum wage is increased, productivity also goes up, which works to expand the economy and produce more jobs.
The current happy financial state of the union tends to support that view. Also, many employers paid more than the minimum wage before Congress increased it, so the action effectively was a nonevent for them.
That is largely the history of the minimum wage, which was first enacted in 1938. Each time increases are proposed, supporters and opponents engage in an alpha-male struggle to assert the supremacy of their respective positions.
The ideological battle has been consistent in rhetoric and outcome for nearly 60 years. What's interesting is that the groups most opposed to changes in the minimum wage, such as the U.S. Chamber of Commerce, surely recognize that the wage standard greatly benefits business.
Before the national minimum wage became law, employers lacked a definitive means of competitively dealing with labor costs and were more vulnerable to the vagaries of supply and demand.
The minimum wage changed all that by providing business with a stated wage level for millions of workers.
As a return on investment, the law has worked as intended. It has helped subsidize both business growth and national prosperity.
Henson is a Plastics News assistant managing editor.