Progressive’s “Fair Pay Act” Could Lead to $125/mo Lower Earnings. Expansion of “Training Wage” and EITC Recommended by Center.
FOR IMMEDIATE RELEASE: January 31, 2018
Resulting Reduced Earnings Would Harm Low-Wage Workers, Employers, and Economy
Expansion of “Training Wage” Recommended to Give Teens a Leg Up to Earn Vital Work Experience
Providence, RI — With the legislative onslaught from the progressive-left against employers and job growth now in full gear, the RI Center for Freedom & Prosperity counters the misinformation put forth by supporters of the misguided “Fair Pay Act,” while offering more productive alternatives.
With the Ocean State already suffering from one of the worst state business climates and family prosperity rankings in the nation, the Center has published ample research over the years that demonstrates that the very people progressives seek to aid are the people who will most likely be hurt by new wage mandates. The Center’s research concluded:
- Job losses, or a cut in hours worked, for many of the same people the legislation is intended to help
- The vast majority of minimum wage workers are not heads-of-household, who need to earn a living wage for their family
- It is a lower minimum wage that will make our state more competitive with our neighbors. We should be in a competition for employers.
- Increased minimum wage mandates decrease job growth and economic activity
- The often overlooked “wage-differential” factor will harm many employers with regard to massive increased costs for their non minimum wage workers
The Center’s findings have recently been backed up by actual results from the city of Seattle’s own findings, following its disastrous rush to force job-producers to pay a $15 minimum wage. The University of Washington study concluded that employment losses associated with the $15 mandate actually reduced total employee earnings, lowering the average earnings of low-wage employees by $125 per month.
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Further, as Rhode Island employers already voluntarily engage in fair-pay practices, the attempt by progressives to mandate gender pay equity cannot be fairly enforced and would also lead to unintended adverse consequences, .
“When employers are faced with high financial or legal risk when making employment decisions, they will naturally avoid such decisions and resort to less risky employment practices,” commented the Center’s CEO, Mike Stenhouse. “The result will inevitably be that fewer women, fewer low-skilled job-seekers, and fewer teens will be hired.”
To give teens a leg up in obtaining vital work experience and spending money, and as a counter to the adverse impact of higher minimum wage mandates, the Center suggests that Rhode Island’s existing “Training Wage” provisions be expanded to provide for a greater wage differential, to more teens, and in a greater number of work environments for the allowable “exceptions” to the minimum wage laws (www.dlt.ri.gov/ls/minwage.htm). Such reforms would make hiring seasonal and part-time workers a win-win situation for employers and teens, and should be designed so as not displace more experienced or full-time employees.
And, as it has advocated in recent years, the Center also recommends expansion of the Earned Income Tax Credit (EITC), as a more effective way to bolster incomes for low-wage family workers. EITC tends to be an incentive to work more hours and, as opposed to most other public assistance programs, can put families on a path to economic independence, without risking opportunities for work. Combined with other
public assistance programs, more families can more quickly rise out of poverty when family members are actually working.