- - Monday, October 26, 2015

ANALYSIS/OPINION:

Like his progressive counterparts, University of California-Berkeley professor Robert Reich is an outspoken advocate for more than doubling the federal minimum wage to $15 an hour. Unlike his progressive counterparts, he admits that doing so could cause job loss.

This is somewhat surprising because despite the fact that even left-of-center economists like Alan Kreuger, Katharine Abraham, and Harry Holzer have warned about job loss from a $15 national minimum wage, the message hasn’t filtered down to the activist class. What’s more shocking is that Mr. Reich still supports it, arguing in a recent blog post: “Even if a $15 an hour minimum wage risks job losses, it is still the right thing to do.”

That’s easy for Mr. Reich to say. It’s unlikely that his very well-educated employees at UC Berkeley or the Blum Center, where he is a research fellow, would be affected by the job loss associated with a $15 mandate. Rather, the hardest hit would be low-wage, low-skilled employees, exacerbating the inequality that Mr. Reich wants to solve.

Mr. Reich argues that raising the minimum wage is a moral issue that transcends the negative effects on some individuals. The logic that you can’t make an omelet without breaking some eggs is part of a progressive-intellectual tradition dating back centuries, often ending with horrific permanent results. (After all, you can’t unscramble an omelet.)

President Franklin Delano Roosevelt made an argument similar to Mr. Reich’s when he favored a higher minimum wage in 1933, saying, “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” Except rhetoric aside, Roosevelt exempted most industries that hired unskilled employees.



But what Mr. Reich and other progressive activists overlook in the wage debate is that in order to earn a living wage, you must have living-wage skills. This is less common than it sounds. According to the most recent National Assessment of Adult Literacy, 32 percent of Americans have basic or below basic document literacy skills. This means they have trouble filling out a job application, let alone performing basic work tasks that many take for granted.

These are the employees who need the training offered by a minimum wage job in order to acquire the skills necessary to earn a living wage and more. These skills go beyond just learning how to flip a burger or fold a T-shirt. They include transferable analytic and literacy aptitudes as well as soft interpersonal, time management and customer service skills.

The data show that learning these skills have an immediate impact on wage growth. Economists at the University of Miami and Florida State University found that two-thirds of minimum wage employees earn a raise within their first one to 12 months on the job. If they paid for these skills in a classroom they could cost thousands of dollars.

But rather than being lauded for their role in training the nation’s workforce, low-wage employers are vilified by Mr. Reich and other progressive activists for failing to pay higher wages. If these activists must blame someone for wages they don’t think are high enough it should be the customer, who refuses to pay more for basic services. And barring the service equivalent of a “Buy American” campaign in minimum wage sectors of the economy, these labor cost demands are unlikely to arrest the default option of self-service instead of higher prices.

Mr. Reich’s activism for a dramatically higher minimum wage will put valuable training opportunities further out of reach for those who need them most. Some minimum wage advocates can plead ignorance to these economics. Mr. Reich, on the other hand, understands the policy math and apparently is OK with the consequences.

Richard Berman is president of Berman and Co., a Washington public affairs firm.

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