Wage Wars

Sixteen years ago, Mark Ishaya, an Iraqi immigrant, began his first job: flipping quarter pounders and bagging fries at McDonald's for low wages. Today, Ishaya is an area supervisor for three Chicago McDonald's restaurants. At 31, he makes about $45,000 a year and receives fringe benefits that include health care and a leased 1995 Ford Explorer. But if Congress passes higher minimum wage legislation, we may see fewer success stories like Mark Ishaya's. You see, one of the best ways for people with few job skills to get ahead is to begin working in a fast-food restaurant. These employees learn far more than just how to clean tables or flip burgers. They learn the importance of punctuality, dressing neatly, and treating customers with respect. In other words, they learn skills that can advance them into higher-paid managerial jobs. Robert Alverez, an African-American who owns three Washington, D.C., McDonald's franchises, explains it this way: "Our employment goal is simple: We want our entry level jobs to lead to solid careers. Through . . . on-the-job experience . . . we teach people how to run a business." This on-the-job training pays off: More than 60 percent of today's restaurant owners and managers started out in low-paying entry-level jobs. And that's something our lawmakers ought to keep in mind as they consider raising the minimum wage to $5.15 an hour. Economist William Poole predicted in the Wall Street Journal that if the wage hike is implemented, as many as 400,000 jobs will be lost. Who will lose those jobs? The "weakest and most vulnerable members of the labor force," Poole predicts. The current minimum wage is $4.25 per hour. But to get the true cost of hiring someone, you have to add on all the benefits mandated by government--social security, worker's compensation, and so forth. These costs drive the total cost to well over six dollars an hour. A prospective employer has to ask himself: Does this worker's labor produce six dollars an hour? If the answer is no, the company can't afford to hire him. Think of it this way: Every time the government increases the minimum wage, it puts a higher price tag on low-skilled labor. Companies that can't afford the higher price can't hire the workers. The minimum wage essentially prices them out of the market. Minimum wage laws were implemented with good intentions-- to help the poor. But their actual effect in many cases is to eliminate jobs for poor teenagers--blocking them from working their way out of poverty. Of course, Christians are commanded to care about justice for the poor, and low-paid workers do need help. The question is, what helps the most? What seems to help can have the unintended consequence of blocking opportunity. Now, I know it's an election year and everybody wants to curry favor with the voters. But we've got to judiciously weigh all of the possible consequences of proposals like this. The important thing, remember, is to give people an opportunity to work their way out of poverty--something too large an increase in the minimum wage can jeopardize. People like McDonald's supervisor Mark Ishaya are living proof that low-wage jobs can lead to a successful career--one that springboards poor youth out of poverty and onto the rungs of the ladder of economic success.

05/24/96