UNDERWOOD: Upping minimum wage would be more over-regulation

Should Indiana raise its minimum wage of $7.25 per hour?

In nearly every national business ranking, Indiana has moved from the middle of the pack to among the top 10 in the country. We are currently ranked first for best government in the nation, third for our economic outlook, fourth in opportunity, and eighth for the best business-tax climate. The accolades that continue to pour into the state are hardly an accident; they are the result of hard work and determination by Hoosier policymakers. 

While many of our neighboring states have struggled to gain economic footing, Indiana lawmakers have had the good sense to empower the small-business community and create an environment for growth and stability. This economic improvement is thanks in part to our leadership’s managing to avoid the politically expedient movements that have begun to damage some state economies.

Part of our success has been our ability to ward off activist proposals proclaiming a one-size-fits-all approach to the operation of our small businesses. That is thanks to leaders in both the House and Senate understanding the negative impact over-regulation can have on the business community and the jobs they create. Increasing the minimum-wage rate is a prime example of a dangerous practice based on feel-good sound bites in the media instead of the actual truth.

While Indiana’s small-business community has so far been spared the onslaught of the “Fight for 15” supporters, it is imperative that the state remain vigilant and continue to advocate for our job creators. This issue is being pushed by organized labor—despite the fact that union jobs pay much higher—because union wages are proportionally tied to the minimum wage. Therefore, a higher minimum wage would inflate union compensation all the way up the scale.

Proponents have made a lot of noise proclaiming that minimum-wage rates should be raised to assist lower-skilled workers by putting more money in their pockets. The real story is that most minimum-wage workers are either in entry-level positions or are persons supplementing additional income. That’s because the minimum-wage rate was never intended to feed entire families or be a rate that one worked at his or her entire life. It was designed as a training wage, a place to start.

Data published by the Federal Reserve Bank of San Francisco clearly demonstrated that raising the minimum-wage rate has consistently done one thing: It has decreased available work for young and lower-skilled workers. It’s simple: When it becomes more cost-effective for people to order food on a tablet instead of with a person, small businesses are forced to decide between long-term technological investments or job creation.

Whether it be our local delis, pizza places or ice cream shops, the small businesses that are intertwined into the fabric of our family routines are the locations that will stand to lose the most if we begin to increase their labor costs arbitrarily. As Indiana continues to rise in the national rankings because of strong economic growth, the last thing we should do is take a giant step backward by increasing our minimum wage.•

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Underwood is the Indiana state director of the National Federation of Independent Business. Send comments to ibjedit@ibj.com.