A Training Wage Would Disempower Workers by Imposing a Monetary Penalty on Labor Mobility

With the Seattle City Council meeting today to discuss (and possibly vote on) the proposed $15 minimum wage ordinance, I thought it useful to take a moment to drill down to the heart of the problem with a training wage: It disempowers workers by imposing a monetary penalty on those who choose to change jobs.

Think about it. Most fast food employees work multiple part-time jobs, so it might take four to six months (or even longer) to work through their training wage hours at each employer. But let’s say they are unhappy with their manager, or find another minimum wage job closer to home—switching jobs would restart their training wage clock to zero. That means another four to six months (or longer) of sub-minimum wage.

Employers know that. They know that after putting in their training wage time, employees will be loath to take a 25 percent pay cut for the privilege of working someplace else. This would shift the already lopsided balance of power in the employment relationship even more in favor of the employer. And if there wasn’t already such a large balance of power disparity, a minimum wage wouldn’t be necessary in the first place.

The fact is, it’s not really a training wage. Most minimum wage hires aren’t like apprentice plumbers or electricians, learning a new and complicated craft. They are service workers, largely in the restaurant, hospitality, and retail industry, who have prior experience doing the same work. It’s not like manning a drive-thru window at McDonald’s is all that much different from manning a drive-thru window at Burger King. Yet every new hire could be paid a “training wage” regardless of their real-world work experience.

A training wage serves as an artificial disincentive to labor mobility, and as such distorts the labor market in favor of the employer.

If you could effectively target a training wage to those few new hires with no relevant work experience, then that might be a different story. But you can’t. So in an industry with up to 200 percent annual turnover, it just makes no sense to financially penalize workers every time they change jobs.

 

Comments

  1. 1

    wl spews:

    Although from the workers viewpoint it would be a disincentive for switching jobs, it would create turnover by employers who fire people to get new cheap labor.

  2. 2

    Sloppy Travis Bickle spews:

    You know what else impairs labor mobility? Fewer potential new jobs to move in to, if businesses close, don’t expand, or automate as a result of the minimum wage increase. You dismiss business closures fairly readily in deference to your goal of a uniformly higher minimum wage. But it will bite you in the ass if it results in substantially fewer jobs being created/sustained.

    Make a trainee period short enough and there isn’t any incentive for an employer to fire someone @1 in order to replace them with another trainee. Make it short enough and someone really looking to get out of one employment situation and into another will be more likely to bite the bullet and make the move.

    You alleged the Seattle Times editorialists pulled 85% out of their ass, even though it likely was based on WA state law in a related scenario. I suggest you are pulling 4-6 months out of your ass by basing it on – what, some prior proposal at the state level by legislators who never would have gotten it past the state house and governor even if they had passed it through the senate? Bullshit.

    What is impairing labor mobility is the difficulty too many people – young and poor especially – have getting that first job. Until you materially address that problem, rather than making it worse, it makes little sense to worry about how they’ll leave that first job for the second one.

  3. 3

    ChefJoe spews:

    So… even though current WA law is for teen workers to be 85% of min wage you think a 75% training wage is passable ?

    Personally, I think an 85% rate sounds acceptable when leaving min wage as currently stands is 65% of $15, right ?

  4. 4

    Sloppy Travis Bickle spews:

    @ 3

    A reasonably short training period and a reasonably small training wage discount don’t give him sufficient reason to rant. In fact, they might even seem appropriate, when viewed in the context of otherwise paying a pimply-faced 16 year old $15/hr to learn to make change for the first time.

    Far better to scare people.

  5. 5

    you gotts be kidding spews:

    Wow, the $15 Now crowd is ruckus and show a lack of political understanding by trying to hand in original copies of the signatures for their initiative. I am not so sure it advances their cause to repeatedly show a lack of respect for The City Council.

  6. 6

    headless lucy spews:

    re 2 — You always appeal to fear as a motivator for keeping the status quo. Now that WFB jr has gone, you could stand in front of progress and say: ‘No Further!’

  7. 7

    Sloppy Travis Bickle spews:

    @ 6

    Interesting thought.

    I just think that it’s important to keep in mind the potential consequences of what’s being discussed.

    Raising wages may increase overall worker income but it will come at the expense of some loss of job growth, or possibly even an overall job loss. Maybe that’s a fair trade-off. We’ll see.

    If the discussions of what might occur with trainee discount and duration could be held in realistic terms rather than through hyperbole, that would be helpful, wouldn’t it?

  8. 8

    Scot B. spews:

    I would support a training wage if no more than 10 percent of employees at a given location were paid a training wage and it lasted no more than 8 weeks for a single employee.

    I don’t think that’s what businesses want. But it would be amusing to see them argue for a higher percentage or more time.

  9. 9

    headless lucy spews:

    re 7 — Do you know what a ‘multiplier effect’ is when more consumer dollars are put into a community? I know that you just told me that you want to consider the potential effects of an action on the economy, but I’ve never seen you speak of the multiplier effect of raising the minimum wage.

  10. 10

    Sloppy Travis Bickle spews:

    @ 9

    Actually, I’ve pointed out that, relative to a national minimum wage increase, the CBO has reasoned that there is an initial stimulus, and then a slight drag, and that over a period of several years or more they really can’t tell if there’s a benefit or not. Let me repeat that – long-term, they don’t know if it’s helpful or not. They also think a million jobs might possibly be lost – that’s within their ‘likely range’ of possibilities.

    I’ve mentioned it more than once, and linked. I see no reason to do it again.

    I’ve also pointed out that another piece – Chicago Fed, IIRC – found that most lower-income people, handed a minimum wage increase, use much of it to buy vehicles and go (deeper) into debt. In Seattle, that means more cars on the road at the same time that Metro starts cutting back, which could create a double-whammy.

    Again, as I said above @7, I just think that people should keep in mind the consequences of the things they say they want.

  11. 11

    headless lucy spews:

    re 10 — You tend to seek out information that reinforces your preconceptions and downplay information that does not. I hope that you have not deluded yourself that your research is in any way scholarly or impartial. I’m arguing not with your preconceptions or even your conclusions. I’m simply pointing out that the road that you take leading to your conclusions is not necessarily the best route.

    You state (somewhat ponderously and inaccurately) that ” … the CBO has reasoned (‘reasoned’ or discovered?) that there is an initial stimulus, and then a slight drag, and that over a period of several years or more they really can’t tell if there’s a benefit or not.”

    They (the CBO) know for sure that there is an initial stimulus and then a slight drag. Did you question (or perhaps ‘reason’) if the drag overtook the stimulus or if, even with the drag, the stimulus still accounted for a positive gain — slight drag be damned?

    See what I mean? You’re not too inquisitive. You satisfy yourself with the CBO’s assertion that they don’t know what’s going to happen long term. That means that YOU DON’T KNOW EITHER.

    But you are certainly willing to make the negative and, I would say, slyly racist assumption, that the recipient’s of the higher wages just go out and irresponsibly buy new cars and get into even deeper debt.

    Some might see an opportunity there to sell a lot of purple Cadillacs.

  12. 12

    Sloppy Travis Bickle spews:

    @ 11

    …slyly racist assumption…

    Nice. In two years will everything stop being racist and revert to misogynistic, instead? After all, Godden added to the seattle ordinance being considered that most minimum wage workers are women, so if I participate in a lower-wage discussion I am talking mostly about women and therefore am a misogynist, using your rationale.

    Is that the way it will work when Hillary runs?

    You’re a clown. Missing only the big red nose and floppy shoes.

  13. 13

    headless lucy spews:

    re 12 — “You’re a clown. Missing only the big red nose and floppy shoes.”

    Go ahead, squeeze the wheeze. People often do. Ever the victim, eh Sloppy?

  14. 14

    LeftyCentrist spews:

    @12 “In two years will everything stop being racist and revert to misogynistic, instead?”

    Happened two days ago.