Create Better Jobs, Not Just More of Them

Raising the minimum wage is not only good for the economy but also a matter of basic human dignity.

Protestor Juan Navarro demonstrates in front of the counter at a McDonald's restaurant on Thursday, Dec. 5, 2013, in Los Angeles.

A fast-food worker's minimum wage is not a recipe for long-term financial health.

By + More

For the past five years, lawmakers, business executives and labor leaders have been worried about the same thing: creating jobs. They often have had differing ideas of the best way to achieve job creation, but there has been, mostly, a shared understanding that too many Americans were unemployed.

We’re still in recovery, and the jobless rate – decidedly improved from a high of 10 percent to the current 6.6 percent – is still too high. But it’s not too soon to change the goal from creating jobs to creating good jobs.

When you’re out of work, almost any income is welcome. Even a fast-food worker’s minimum wage of $7.25 an hour is better than nothing, even if it means the bills continue to pile and the credit card debt mounts. But that’s not a recipe for long-term financial health, either for individual workers or for the economy as a whole. People earning such a low wage don’t contribute much to the economy. They buy food; they pay for utilities and rent. But they can’t buy dishwashers or get their nails done or go to restaurants, or do any of the kind of spending that helps sustain and create other jobs, fueling the economy. Further, such low-paid workers end up being subsidized by taxpayers, since so many minimum-wage workers are eligible for SNAP (food stamps), Medicaid and other such benefits. Actually, the benefits are effectively a subsidy for the multibillion-dollar fast-food industry, which can get away with paying such low wages because their employees are given public help.

[See a collection of political cartoons on the economy.]

So what would happen if the minimum wage were raised from $7.25 an hour to $10.10, as has been proposed? Some companies will reduce workers, it’s true. The Congressional Budget Office estimates that a half million jobs would be lost by the end of 2016, should the minimum wage be hiked. That’s the downside.

The upside is that 16.5 million workers would see their wages go up, according to CBO, and 900,000 would be brought out of poverty. That’s not only just a matter of basic human dignity – why should a full-time worker be living below the poverty level? – but it’s better for the economy and eases the burden on federal programs for the poor.

The second prong is helping workers who are skilled, but don’t quite have the skills for the jobs available. One new move in that direction was announced this week by the Department of Labor, which is offering $150 million in grants to train, counsel and place workers in industries now using foreign workers here on the H1-B visa program. The Ready to Work Partnership, financed by a user fee paid by employers that bring international workers here on such visas, is aimed at the long-term unemployed. Most of the jobs will be in information technology, health care and advanced manufacturing, Labor Secretary Thomas Perez told reporters in a conference call.

[See a collection of political cartoons on Congress.]

It’s potentially a great chance for people who have been out of work six months or longer. Such workers find it particularly hard to find a new job, perhaps because employers are spooked by hiring someone who’s been out of work for so long, and perhaps because the jobs they had been doing don’t exist anymore. They do need jobs, and we all need them back in the workforce, paying taxes and fueling the consumer economy. They key is making the new jobs good jobs. Adding a bunch of $7.25-an-hour employees to the mix isn’t going to work for anyone.