Pensacola, Florida
Saturday December 16th 2017

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Must Have Job Skills

By Rick Outzen

Dr. Rick Harper believes that the nation needs a measure to help address poverty and household income inequality, but he doesn’t think that raising the minimum wage to $15 per hour is the answer.

“The median household income, not even considering inflation, is about 9 percent lower in 2016 than it was back in 2009 for the nation as a whole,” he told Inweekly. “For Florida, where we have big real estate run up and then the bust, it’s about 14 percent lower in 2016 than it was in 2006. There’s clearly a problem to be addressed, but I think that the minimum wage is the wrong way to go about it.”

Harper is Assistant Vice President at the University of West Florida and the executive director of its Office of Economic Development and Engagement. For over decade, he provided economic analysis for local governments while he headed the UWF’s Haas Center for Business Research and Economic Development. He represented Northwest Florida on Governor Jeb Bush’s Council of Economic Advisors from 2001-2006 and was the Florida Senate’s chief policy advisor from 2012-14.

Harper said that raising the hourly wage places the burden of correcting the income disparity on the shoulders of employers, who may not have the margins to handle the cost increase.

“Any employer in the world would happily pay somebody $15 an hour if they were contributing $20 an hour potentially to the bottom line; then they’d have room to do that,” said Harper. “If somebody only has skills that are worth $5 an hour to that employer, there’s no way that they’re going to create a job and pay that person $15.”

He added, “The net impact on employment would be negative if you’re lucky enough to keep your job and still be employed when that higher minimum wage comes into effect.”

Harper said that the higher minimum wage hurts the people that it’s designed to help, particularly people with relatively-limited skills or are new to the job market. They haven’t had time to build up those skills or don’t have a great education or training credentials.

“They don’t have what they need to be worth a high wage,” he said. “By insisting that they be paid $15, you’re effectively locking those people out of a job because they can’t be hired by any rational business person if they don’t have skills that are worth $15.”

Harper believes that the Earned Income Tax Credit is the better way to deal with income disparities.

“What we ought to do is raise the Earned Income Tax Credit. That is, if you show up for work and you’re only making, well in Florida $8.05 an hour or the minimum wage, then if you wanted to use the Federal Treasury to bump that up to the equivalent of $15, I’d be all in favor of that because it takes the burden off of the individual employer and puts it onto the US Treasury,” he said.

Harper added, “If this is a social policy to give people a living wage, then that’s the way that we ought to do it.”

Technology has reduced the number of lower-skilled jobs in our area.

“You can look locally here at International Paper; it used to have several thousand workers, as many as 7,000 at one point but now has under 1,000,” he said. “They produce more paper than ever before. Those are great jobs, the ones that remain, but automation has changed the way that we work.”

Harper said the same is true at other local manufacturing plants.

“At Ascend Performance Materials, which used to Solutia which used to be Monsanto and then Chemstrand, we produce more extruded nylon products than ever before, but we do it with fewer people. A lot of people have just been automated out of a job,” he said.

Harper added, “That’s something that’s not being discussed in the presidential rhetoric. Instead, we’re talking about other countries’ unfair trade practices when really the dominant cause of destruction in middle-class jobs has been the advent of technology in the workplace.”

The rise in minimum wages has motivated fast-food chains to automate their counter service.

“Not only are they turning the cash register towards the customer at McDonald’s, if you look around Seattle, where they already have $15.00-an-hour as the minimum wage,” said Harper, “there’s certainly an established trend to shift more and more of that burden off of hiring high schoolers and people that are new to the jobs market and at the lower rung of the job ladder, get rid of them and make the customer do that work. Now they do it with technology.”

He predicted that the burger chains will further reduce their workforce by using automated burger manufacturing machines behind the counter where only one person is needed to make and package all the burgers to be used by the entire store.

“That’s a labor-saving move for businesses, and it’s a natural response to having a higher minimum wage rate,” said Harper.

The key to survival in the technological age is to improve skills. The reality of the marketplace is that businesses are in business to make money.

“They cannot afford to hire somebody who doesn’t contribute to the bottom line, which means workers have to have good skills,” he said. “That might not be a university degree. It might be a certificate. It might be welding. It might be a two-year degree. It might be Registered Nurse.”

Harper added, “Those are great jobs, they’re great wages, but yes, the answer in today’s technology-oriented workplace is you’ve got to have the skills. Otherwise, you’re not going to be employable.”

Impact of New Overtime Rule
In May, the U.S. Department of Labor issued its final rule regarding overtime regulations. The final rule, which becomes effective Dec. 1, raises the salary threshold indicating eligibility from $23,660 to $47,476 per year, ensuring protections to 4.2 million workers. Inweekly asked Dr. Harper about the impact of the final rule on our local economy

“I think that one works the other way,” said Harper. “When people sign up for a position, and you can think of all the thousands of people in our local metro area who are working for less than the new standard of $47,476 a year, those people are now going to either be able to get overtime from their employer, or if the employer would rather, that employer can add new workers.”

He explained, “Say that you’ve got 10 workers who are working 50 hours a week and they’re making say, $40,000 a year; one way to handle these new rules would be to bump them up to $47,476, or it would be to hire new workers so that the existing workers don’t have to work more than 40 hours a week.”

Harper warned, “This provision could actually increase employment, but it is some substantial federal meddling in the jobs market.”