[Audio] Murray State Economics Professor on Challenges in Raising the Minimum Wage

Sep 29, 2016

Credit Sergey Kuzmin, 123rf Stock Photo

"Should We Raise the Minimum Wage?" is the title of a debate at Murray State University on October 4 at 6 p.m. in the Curris Center small ballroom. The event is sponsored by the conservative nonprofit organization Institute for Humane Studies. University of Kentucky economics professor John Garen will speak against raising the minimum wage. Georgia State University economics professor Bruce Kaufman will speak in favor of raising the minimum wage. Matt Markgraf speaks with Murray State University Professor of Economics Martin Milkman about this contentious issue and what minimum wage looks like in Kentucky.

The minimum wage in Kentucky is currently tied to the federal minimum wage at $7.25, which is "pretty low" Milkman says - adding that "it would be a tough go" for families with kids. He says there are, however, other programs that aid people who work and have dependents - citing the Earned Income Tax Credit, where people who work, when filing taxes - instead of paying them - will receive money from the government.

Milkman, who opposes raising the minimum wage, says an increase would contribute to more unemployment. He advocates not increasing the minimum wage, but rather increase the benefits from the earned income tax credit.

There was a push by House Speaker Greg Stumbo and others to gradually increase the minimum wage in the last General Assembly and a similar push in Louisville to raise the minimum wage within the city. Milkman says even if the minimum wage issue comes up again this year, he predicts Governor Matt Bevin would veto the measure. He says, though, there's no reason a state earned income tax credit could emerge.

That way, he says low -skilled workers are more likely to have a job at $7.25 than they would be at a higher wage, earning skills and experience in these positions to get a better job or a career. He says another factor to consider is if the minimum wage was raised to $10 or higher, the people who are currently making between minimum wage and $10 would also want a pay increase since they are already earning more.

Milkman says small businesses that can't afford to pay people at higher wages might layoff employees or adopt new technology to replace those workers. He says, for example, McDonald's introduced self-service and automated drink machines last time the minimum wage increased.

One might argue that a higher paid worker could reinvest in the economy with more spending power to buy food or other consumer goods. On this, Milkman says while there may be more demand, some of the minimum wage increase will be passed on in increases. He says there won't be enough money spent by the people who receive more to offset the unemployment that could occur.

Kentucky struggles with high poverty rates, particularly in the eastern part of the commonwealth where the coal industry has substantially diminished. In finding a compromise in the minimum wage issue, pertaining to a livable wage, how would one reduce the poverty rates in Kentucky? Milkman says is people are "stuck" in minimum wage jobs, they would be better off getting some skills (technical school, post-secondary school, apprentice program in a union) he says the long term solution might be to provide training programs where a worker can get a stipend while they are receiving their training.

He says another issue is that often people don't want to move, so he recommends investing in economic development in communities. For this to occur, he says, is to train the local workforce. In paying for a stipend, Milkman says the money to pay for a stipend might come from the state (not unlike the KEES program for students or the GI Bill). Another alternative, he says, is that people can earn a stipend in exchange for volunteer work in the local community.

A debate titled "Should We Raise the Minimum Wage" is at Murray State University on October 4 at 6 p.m. in the Curris Center small ballroom. The event is free and open to the public.