Protesters from North Carolina’s “Moral Monday” movement, as well as other grassroots protests around the nation, have cited an increase in minimum wages as one of their chief goals. What happens, however, when government acquiesces to such demands?
Seattle, Wash., recently approved a measure that would over several years raise the city’s required minimum wage to $15 an hour. This move, however well-intentioned, has untold negative effects on both business owners and their employees, particularly those who hold entry level or unskilled positions. In an open letter published in Northwest Asian Weekly magazine, Seattle’s Ethnic Community Coalition – a group of small-business owners – responded:
“…we would need to reduce our work force and hire only highly skilled employees. Over 10 percent of low-wage workers in Seattle do not speak English well. Right now, we hire many recent immigrants who would not likely be able to find other work in such a competitive market. At $15/hour, we would have to reduce our staff and only hire skilled, experienced workers who speak English fluently.”
Minimum wage laws often have this effect: Unskilled workers lose their jobs, forced out by the government’s attempt to “help” them. For many businesses, unskilled laborers may not return $15 worth of profit per hour on the job, and thus cost the company more to employ than they are worth. If the government specifies that they must be paid $15 per hour, businesses will respond by firing any employee whose labor was not already worth that. Increased minimum wages almost always result in increased unemployment among low-income, unskilled laborers – the very class of people they purport to help.
Not all businesses are faced with this dilemma, though. A Williston, North Dakota, Wal-Mart has recently offered starting wages of $17.40 an hour for entry level positions such as cashier or stock unloader. What makes the difference in Williston? Fracking. Induced hydraulic fracturing, commonly known as “fracking,” is a mining technique that allows the exploration and extraction of oil and natural gas from rock formations that were previously difficult or impossible to develop. The fracking industry has brought job growth to many parts of the country, particularly North Dakota.
The city of Williston is one of the most dramatic examples of economic growth. The oil boom has resulted in a sharp increase in jobs, both for oil workers and for workers in industries that provide goods or services to oil workers and their families. The population of Williston has grown by nearly 50 percent over the past three years, resulting in increased demand for food, housing, entertainment, and essentially every other industry. The only institutions in danger of going out of business in Williston are the unemployment offices! South Dakota boasts the lowest unemployment rate in the nation, 2.7 percent, and some numbers place Williston unemployment as low as 1%. When 99 out of every 100 people are already gainfully employed, businesses are forced to compete for the last few workers, leading to higher wages, professional development opportunities, and myriad other benefits for laborers.
Protesters continue to ask for an increased minimum wage, but they have yet to explain where the money will come from to pay entry-level employees $15 an hour. Perhaps the solution is under our feet. Rather than mimic Seattle, we should follow the lead of North Dakota. Want higher wages for unskilled workers? Legalize fracking.