EDITORIAL

Let’s look at the bigger picture

Posted 2/4/14

It was frustrating and disheartening last week for Rhode Islanders to learn the state’s unemployment rate had ticked up to a worst-in-the-nation 9.1 percent.

The Ocean State’s economic woes, …

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EDITORIAL

Let’s look at the bigger picture

Posted

It was frustrating and disheartening last week for Rhode Islanders to learn the state’s unemployment rate had ticked up to a worst-in-the-nation 9.1 percent.

The Ocean State’s economic woes, of course, are nothing new. How to address them continues to be a major subject of debate, and the recent discussion of the minimum wage on both the federal and local levels points to how the economy – and growing concerns over income inequality in America – will shape the coming campaign season.

On the Democratic side, the key figure emerging is $10.10. That is the minimum wage President Barack Obama, during his State of the Union address, announced he would set for new federal contractors through an executive order. It is also the figure embraced by a growing movement that is pushing for action on the issue in individual localities and states.

In Rhode Island, two of the leading Democratic candidates for governor – Providence Mayor Angel Taveras and General Treasurer Gina Raimondo – have backed the $10.10 figure, with the former calling for its being enacted by 2018 and the latter seeking swifter implementation by 2015. Tying future increases to a cost-of-living index has been put forward as well, including through proposals currently before the General Assembly. The latest entry in the field, Democrat and political newcomer Clay Pell, has also said he supports raising the wage.

Republicans, meanwhile, have been critical of the proposed increase, arguing it would in fact hurt workers by forcing employers to limit hours and reduce payroll. Congressional GOP leaders additionally pointed out that the president’s order is narrow in scope and would only impact future contracts.

In Rhode Island, Republican gubernatorial candidates Cranston Mayor Allan Fung and Ken Block were swift in their response to Taveras and Raimondo.

“Raising the minimum wage isn’t a solution. It’s a symptom of a larger problem,” said Fung. “Increasing the minimum wage will result in higher unemployment, reduced job opportunities, reduced customer spending and will reduce net job growth because of the effect on expanding companies.”

“Today, our state minimum wage is already competitive in the region, and increasing it now will only reinforce Rhode Island’s reputation as one of the worst states for doing business,” said Block.

Rhode Island’s minimum wage rose by a quarter to $8 on the first of the year. The hike was modest and anticipated and does not appear to have created major issues for businesses.

Further steps, however, become more complicated, given the politics surrounding the issue and the competing arguments regarding actual economic impact.

Clearly, there are troubling signs in the way wealth is now distributed in America. Broad-based opportunity and access to relative prosperity are central to the nation’s overall well-being and its democratic ideals. When people start believing the system no longer works for them – as is increasingly the case – apathy and unrest will result. Discourse over economic issues will grow more and more confrontational. The kind of investments vital to future success – from education to infrastructure – will suffer.

But is increasing the minimum wage truly a part of the solution? It would provide additional income for many. Whether that would be offset by companies providing workers with fewer hours and reducing overall payroll seems to be a matter of one’s perspective.

It would not change the circumstances for those currently out of work, those part of a troubling trend of long-term – perhaps even permanent – unemployment. It would also not change the underlying dynamic of an economy adrift, one without its former manufacturing foundation – or a viable replacement – and one still recovering from the crash of 2008.

This is not to say the minimum wage should be ignored. It must be considered and debated, as must any idea that could play a role in improving lives and strengthening communities.

It becomes problematic, however, when the issue becomes less a serious subject of discussion and more a political talking point, one used to paint others as either clueless and counterproductive or heartless and out of touch. When that kind of rhetoric dominates, the bigger picture is obscured. And right now, Rhode Island is sorely in need of some big-picture thinking.

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  • JohnStark

    "Income inequality" has existed since the Stone Age, when Ug possessed skills that demanded a higher compensation than Grug in the Stone Age marketplace. And Yes, I'm sure Grug displayed class envy. But let's do the math to illustrate why "income inequality" is only going to grow, based upon the stubborn laws of mathematics. An individual making $300,000/yr receives a 5% raise and his income increases by $15,000. A second person makes only $30,000/yr, but receives a much bigger raise of 20%. However, that only translates to a $6000/yr. increase. Voila, "income inequality" grows. The ONLY way to reduce "income inequality" is to put a permanent freeze on higher incomes. Unless one is prepared to introduce such a measure, which would dis-incent work (perhaps that's the goal, after all) it's probably best to remain silent on a non-issue. Income is an result, and America has never guaranteed equality of results.

    Wednesday, February 5, 2014 Report this