Unemployment and the Minimum Wage

Unemployment and the Minimum Wage

All writers in Op Ed are here to inform and acknowledge issues of importance to our communities, however these writings represent the views and opinions of the authors and not necessarily of The Advertiser.

By Robert Scott

Why does our unemployment rate stubbornly remain at roughly twice what it was before the pandemic? Asking those who are unemployed would yield many answers. For some, their old jobs went away when the pandemic hit and never came back, and no equivalent jobs are yet available. Others are needed at home due to the loss of childcare or due to schools remaining wholly or partially closed. Although there has been no apparent effort to survey our unemployed to find out why, our state government has concluded the real reason: the federal and state pandemic unemployment programs pay as much or more than their previous jobs, so there is no good reason to return to work. The solution: end those programs. Governor McMaster has responded by withdrawing from all federal COVID-related unemployment programs, effective June 30. Like the federal expansion of medical care eligibility a few years ago, we in South Carolina will still pay the federal taxes allocated for this benefit to those of our citizens who are at or near the bottom of the financial barrel. We will just make sure that those who would otherwise be eligible to benefit from those programs, don’t do so here.

Let’s look at that supposed conclusion: those of our neighbors who are paid the least earn more due to the pandemic unemployment programs than they would earn if they returned to work. And how much is that? As this column has pointed out before, many states have enacted a statewide minimum wage well above that mandated at the federal level: $7.25 per hour. South Carolina has not. That level has not been increased in 10 years, and there are many families in Edgefield County and elsewhere who have experienced the poverty that comes with earning at or near that minimum. In terms of purchasing power, our minimum wage is much lower now than it was 50 years ago. Church groups and others argue that it is morally wrong that a family of four in America could live in poverty with the provider employed full-time. If we are paying potential workers more to stay home and receive funds from unemployment programs, the right solution is not to cancel those programs. Instead, we should ensure that those returning to work are paid more than unemployment programs would pay them. In other words, we should increase that minimum wage – including for restaurant workers, whose erstwhile employers are among those lobbying the hardest right now to do away with that raised unemployment compensation.

But wouldn’t that make all of us pay more at restaurants and perhaps for other goods and services, whose workers earn near the minimum wage? Yes, it would. Put another way, we are now paying workers too little for them to be able to support a family, much less to go out to eat; those of us who can afford to do so are benefiting at their expense. The problem is not that we are paying those who are unemployed too much; it is that we are paying those who are employed too little.