Does a higher minimum wage effect job stability?

Jim asked me to reference this article as he plans to discuss it on the big radio show this morning between 9 a.m. and noon on WTIC. The minimum wage has been a frequent topic here at RVO, and this story illustrates another – yet foreign – example.

From Crain’s Chicago Business.

Newly public Knowles Corp. faces a bumpy start

Knowles, maker of miniature speakers and receivers, was spun off this month from its conglomerate parent, Dover Corp. The Itasca-based company enjoyed a sixfold burst in revenue between 2005 and 2013, to $1.22 billion. But the company already is warning that first-quarter revenue will slide 4 to 6 percent from a year ago, with sales in its key mobile consumer electronics segment decreasing as much as 9 percent. Operating profit is projected to fall 15 to 20 percent.

As a result, the stock has moved but a little from its debut at $31.23 on March 3 to $31.02 on March 14.

“We face some headwinds early this year,” acknowledges Jeffrey Niew, 47, Knowles’ president and CEO. “But we think those headwinds will shift behind us after the third quarter.”

So what’s a company to do?

The company is moving its hearing-aid production from China to the Philippines this year after its 1,000-member Chinese workforce won minimum wages of $3.50 an hour, up from 60 cents an hour when Knowles arrived in 1996. “Our labor costs will be halved in the Philippines,” estimates Mr. Niew, who is closing plants on other fronts to consolidate production in fewer places.

I’ve said this a few dozen times now. When costs increase for any business – including government mandates – the owners/managers must make decisions. Connecticut Gov. D.P. Malloy (D) and Lt. Gov. Wyman (D) can tell us all day long the government mandate “will not put any kind of burden on our employers,” but that does not make it the truth. It’s a lie.

Read and share this previous post, Minimum Wage… President Obama, where does the extra $3 come from?

7 replies
  1. chasb101
    chasb101 says:

    If I have to pay you more money to flip my burger than I have to charge you more money to buy one.     The minimum wage is a wash in my opinion.

  2. Linda Mae
    Linda Mae says:

    Very simple…for unskilled jobs…the current minimum is on target.  9Who has done a study investigating to determine how long an employee is paid the min. wage? ) For career jobs, the minimum wage amount is usually to low to attract skilled trained workers so it’s a non-issue.  Reps should claim the issue is not to increase the minimum wage but to improve the economy, increase job training, convince American workers to put some effort into making themselves employable.  
    CT is one of 12 states which offer a portfolio-based high school completion option call the National External Diploma.  One key element is to show proof of employability.  An employer letter stating one-year full-time work; job training certificate plus work under the certificate; demonstration of skill in front of a community adviser (ex,  cashier…must demonstrate mastery of skill.), basic skills portfolio (using Occupational Handbook description of skills to do a job, prepares a portfolio showing mastery of skill..also reviewed by community adviser who is expert in field).  All work completed in this program must show 100% mastery of each competency.  
    We also forget that some minimum wage jobs also offer perks….ex McDonalds used to…

  3. Aaron0084
    Aaron0084 says:

    There are other issues related to a high minimum wage that I have not heard discussed in this debate.  The biggest one for me is the opportunity costs of a high and inflexible starting wage.  There was a time in our society where workers got their job training on the job.  Labor laws and a high wage make it pohibitivly expensive for employers to take the risk of training workers on the job so now, having some sort of job training, a college degree, or direct work expierience to even be considered.  When I was in high school, I got a summer job working in a bicycle shop.  I had no experience but the owner learned that he could pay me an “apprentiship wage” which was lower then ther minimum for the whole summer.  I also had the choise of working at a nearby donut shop for twice the minumum wage.  I took the job at the bike shop at the lower wage by choise.  Under current labor laws the the higher minimum wage, I would never have had the oppourtunity to have that job.  By the  way, he hirred me back over the Christmas holiday and the following summer and paid me more then the minimum at that time.

  4. Dimsdale
    Dimsdale says:

    I think the underlying problem is that in the Øbamanation, minimum wage jobs are considered a career and not a brief stepping stone to a better job(s).  Sadly, the effects of this economics ignorant administration will keep people in the lowest rungs of the economic ladder.

  5. bien-pensant
    bien-pensant says:

    “Minimum Wage” is nothing more than a campaign slogan to this regime. For the democrats, it is a way to raise the prevailing wage — union wage. I think of that as a boot on the throats of millions of everyday workers and business owners.
    All that increasing the  minimum wage does is provide for disincentives to low-skilled labor from entering the work-force. The only real incentive is for higher costing government contracts, which benefits largely union businesses, which ripples to their suppliers, etc. (Unions are an endangered species. Now they are going after college athletes.) The democrats don’t care if a McD burger is $10! You’ll pay!!!!!!
    How are you going to get experience if you can’t get hired? Even with experience, how are you going to make a livable wage if the threshold is too high? Exactly, what is worth $10.10, or whatever, per hour? The market ultimately decides.
    Obama is the problem. And, he always has been. (Is Obama plural by now? As in: democrat.)
     
     

  6. Common Man
    Common Man says:

    Malloy and the legislature believe raising the minimum SKILLS wage will help people get out of poverty, so CT raised it from $8.70 to $10.10 per hour. At a 40 hour work week that equates to $56, then figure $11 (20%) for taxes leaving $45 dollars. Who knew $45 could bring people out of poverty. Maybe they should’ve followed Obama’s advice and gave up a cell phone or cable TV to get out of poverty. That’s what he proposed to afford Obamacare.
    Malloy said after the vote. “This modest increase will give working families a boost, and it will contribute to our economy by getting just a little more money into the pockets of people who will spend it in their communities.”
    Said the man who gave us the biggest tax increase in CT history and took money out of our pockets.

  7. Lynn
    Lynn says:

    If they really want to help minimum wage earners, they could lower gas tax, lower some of the creative taxes  that Malloy added his first year, especially the “sin” taxes. Everyone could benefit from lower taxes and a leaner government. Higher minimum wages will just be eaten up by all of the above.

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