Can Government Mandated $15 An Hour Minimum Wages Really Help Workers And Create More Jobs?

S.T.E.M. educational improvement better for wages creation

Tuesday’s Indiana primary victories for Democrat Bernie Sanders and Republican Donald Trump showcased two major, conflicting visions for jobs and wages creation. Who is right?

Democrats Strongly Support A Government Mandated $15 Minimum Wage.

Mr. Sanders proposes more than doubling the federal minimum wage from its current $7.25 to $15 per hour. This is in step with several state efforts including New York and California.

For example, Democratic Governor Jerry Brown plans to raise California’s state minimum wage to $15 per hour by 2022. This will be a 50% increase over the existing $10 per hour minimum wages; already one of the highest of any state. As a result, more than five million low-paid California workers or 38% of California’s workforce will receive an average pay increase of about $4,000 according to University of California, Berkeley economist Michael Reich!

Leading Princeton Economist Disagrees

Princeton economist Alan Kruger feels this is not the right answer for increasing wages and adding new jobs. His research suggests raising the minimum wage to $12 per hour would be a better option saying, “$12 per hour would not destroy jobs, but a $15 national minimum wage could well be counterproductive, destroying jobs creation.”

Something Must Be Done To Boost Wages

Four years of nationally averaging more than 200,000 jobs created per month has reduced the unemployment rate from just above 8% in early 2012 to 5% last month. However, little progress has been made in overall wages growth. Most recent figures from the Labor Department show that wages and salaries for private sector workers rose only 2% in the first quarter from a year earlier.

Additionally, states’ job creation has been very uneven. For example, the most recent Illinois state jobless rate climbed to 6.5%, which is 1.5% above the national average! Moreover, Illinois is one of ten states, which have still not recovered all the lost jobs from the Great Recession 6 ½ years ago! As a result, much more needs to be done to boost wages and jobs creation.

Can Government Initiatives Really Create More Jobs And Higher Wages?

The other big primary winner in Indiana, Mr. Trump, says “no.” Instead, he feels that taking the shackles off of business will release the engine of free enterprise to do so.

The April 17, 2016 issue of Parade Magazine’s Annual Report tends to substantiate this. Listed were wages earned by a wide range of Americas. Among them: a) Rapper and entrepreneur Jay Z at about $56 million b) U.S. Coast Guard Marine science tech and ice observer Brett Reel at $29,800 and c) Uber driver Randy L. Shear at $42,005. They had very little in common except for one thing; few of their professions and corresponding wages were created by government intervention.

Additionally, most state and city politicians who have worked hard to raise the minimum wage have found it very difficult to enforce those laws. Recent research from Seattle, Washington, which increased their minimum wage to $15 per hour in 2014, found that 25% of businesses were cheating their workers by not offering the mandated minimum wage. Without enforcement, these mandates are meaningless, but policing is very expensive.

A Better Path Towards Higher Wages And Increased Jobs: Improving Our Nation’s S.T.E.M. Education!

The tech industry, the main focus of my technical and engineering recruiting practice, dominated top median salaries and wages in a recent study by career site Glassdoor. Among the top ten wages were companies were A.T. Kearney, Google, Twitter, VMware and Cadence Design Systems. All are routinely paying over $150,000 to attract key talent.

Additionally, my technical recruitment team has announced for months that R&D (research and development) and engineering positions in software, AI (Artificial Intelligence) and VR (Virtual Reality) have a lot more demand than supply of good candidates. This Glassdoor survey reinforces our anecdotal information with strong statistics demonstrating growing technical industry wages as the war for talent is continues.

However, not everyone can work in and enjoy the high wages of technical fields. Technical recruiters will reject many desiring to entire technology fields because they are handcuffed by shortcomings of the American educational system. Especially a lack of S.T.E.M. skills holds many back.

As I wrote previously one area government could help is improving S.T.E.M. education. We sadly trail the rest of the world in Science, Technology, Engineering and Math training. As a result, not enough engineers, scientists, R&D, IT, and technology professionals are minted each year to meet demand. Therefore, if the government really wanted to help create a lot more jobs with high wages, they would focus on improving education in general and S.T.E.M. education in specific.

Please leave your comments below and I will reply.

Top Technical recruiter and Engineering Recruiter