Our Opinion: Instead of hiking minimum wages, narrow skills gap

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The perennial push to raise North Carolina's minimum wage to $15 an hour is back in the headlines, though anyone tracking the flow of legislation in Raleigh would be hard-pressed to tell you why.

Since the General Assembly's short session began last month, the N.C. Democratic Party, advocacy group Raising Wages NC and the progressive North Carolina Justice Center have been touting Senate and House minimum wage bills that stand zero chance of a committee hearing, let alone becoming law.

Former Sen. Angela Bryant, D-Nash, filed Senate Bill 210 on March 7, 2017. One day later it was referred to the House Rules Committee, a legislative boneyard where bills go to die. The House version, HB 289, was similarly shelved. Advocates are trumpeting these year-old policy proposals as if they were hot off the presses to get the issue on voters' radar ahead of November's legislative elections.

A $15-per-hour pay floor is the wrong prescription for North Carolina's economy. It's no coincidence that the states with the highest minimum wage - Washington, California and Massachusetts — have high costs of living that will only increase as inflation drives up rents and consumer prices. 

Pitched as a life preserver for the working poor, the $15 mandate would mainly give teenage part-timers and second-income earners a raise at the expense of low-skilled laborers. A 2016 study by San Diego State University economist Joseph Sabia cites Census data showing only about 13 percent of workers making between $7.25 and $10.10 an hour live in poor households while "nearly two-thirds live in households with incomes over twice the poverty line and over 40 percent live in households with incomes over three times the poverty line."

Most minimum-wage workers aren't the family breadwinner. And hiking labor costs forces businesses to downsize, jeopardizing the jobs of the least-competitive employees. Think high school dropouts, former inmates and mentally challenged workers. 

Sabia's study cites a body of academic research to conclude that "a 10 percent increase in the minimum wage reduces low-skilled employment by 1 to 3 percent."

For heads of households, jobs that pay $7.25 have long been intended as the first rung on the occupational ladder, not a plateau where workers should stagnate. Artificially doubling the pay for entry-level work reduces the incentive to pursue the education and training that helps people triple or quadruple their wages. 

The help-wanted signs are out at welding and construction companies, factories and trucking firms. Yet managers can't find qualified workers in the skilled trades, which pay decent salaries with the potential for advancement. There are a glut of unfilled jobs that require more than a high school diploma and less than a bachelor's degree.

If lawmakers really want to help the working poor, they ought to expand training opportunities and work at whittling away North Carolina's skills gap. 

As the national and state economies continue to recover, the free market has shown it's capable of increasing pay and perks without government meddling. Big-box retailers Walmart and Target have both implemented $11-an-hour minimums, and Walmart announced Wednesday it will pay its associates' college tuition for four-year business and supply chain management degrees if they pitch in $1 per day.

When unemployment is low, companies raise wages on their own in order to recruit and retain the best employees. No prodding from Raleigh or Washington is necessary.

Advocates for government-imposed wage hikes raise the specter of income inequality, citing stratospheric pay for CEOs and corporate executives. That's a cynical dodge and a statistical red herring, as lifting low-wage earners out of poverty doesn't require narrowing the gap between them and their bosses. Inequality may have risen, but so have average incomes on the low end of the scale. 

"You should care about 'How do we make poor people rich?' not 'How do we make rich people poorer so that everybody's at the same level?'" notes conservative pundit Ben Shapiro. "Because that's just you being jealous. That's just you not liking the guy's house next door because it's bigger than your house."

Politicians who campaign on minimum-wage hikes do so at their own peril. There's nothing compassionate or moral about driving up inflation and spiking labor costs until businesses shed jobs, hurting instead of helping the least-able and most vulnerable workers.