Monday, April 25, 2005

Minimum Wage Hearing

Senator Daniel Da Ponte has introduced legislation that would significantly change minimum wage in RI. S0277, would: increase the minimum wage from the current $6.75 to $7.25 on January 1, 2006, and to $7.75 on January 1, 2007. Beginning January 1, 2008, and every January thereafter, the minimum wage would be adjusted based on the northeast region cost-of-living index, as determined by the U.S. Department of Labor. I've always felt that minimum wage laws were a necessary evil. Necessary in that as it gets more expensive to purchase goods and services there must be away to ensure those at the lowest income levels are not completely left behind. Evil in that minimum wage laws force market conditions. What I mean is, in a completely free market would RI minimum wage be $5.50? Or maybe even $10.50? Minimum wage laws take market fluctuations out of the equation and contrary to popular belief-the market doesn't always hurt the little guy. Yet, I do see this legislation as making minimum wage less of a political tool and more of a response to the environment of the Northeast economy. I do have a question for Senator Da Ponte: if the cost-of-living index happened to move downward, would minimum wage also be decreased? The hearing for this bill will be tomorrow 'around' 2:30pm at the State House.

2 Comments:

Anonymous Andrew said...

One of the problems with raising the minimum wage is that it impacts small, mom-and-pop style businesses disproportionately.

Here's what I mean. Suppose a small deli decides it needs more work done in order to grow, but it doesn't have the cash flow to meeting an articifically high "living wage" required to add another position. That result is, for instance, 5 people doing the work of 4, a pretty big increase for each individual.

On the other hand, when Dunkin' Donuts or Starbucks decides more work is needed, but the cash flow won't support another employee, management asks 201 people to do the work of 200, a relatively small increase for each worker.

4/25/2005 10:16:00 PM  
Blogger Don said...

Andrew,

you're right about how this has an effect on small businesses. It's just very difficult to balance living wages in a supposed free market society.

4/25/2005 11:05:00 PM  

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