Minimum-Wage Hikes Hurt R.I. Workers

Article excerpt

While Rhode Island continues to suffer from the highest unemployment rate in the nation, some legislators in the General Assembly are supporting legislation to increase the state's minimum wage to at least $10 an hour. That would give Rhode Island one of the highest minimum wages in the nation.

Though an increase in the minimum wage might cause some minimum- wage workers to see an increase in pay, others would probably lose their jobs. In fact, history and economics show that increasing the minimum wage can lead to higher unemployment, in particular for young and low-skilled workers.

In 1936, Rhode Island enacted legislation empowering the director of the Rhode Island Department of Labor to establish minimum wages for women and minors. In 1937, Thomas F. McMahon, the president of the United Textile Workers union, was appointed the state's director of labor. McMahon appointed a board to develop a minimum wage for workers in the wearing apparel industry, essentially textile workers.

In July 1937, this board proposed a minimum wage of 35 cents per hour. The proposal was strongly criticized. Advocates for manufacturers stated that this minimum wage would put Rhode Island manufacturers at "a decided disadvantage in competing with manufacturers of other states" and that 35 cents an hour was "decidedly higher" than minimum wage requirements in other states. Also, opponents noted that a minimum wage of 35 cents per hour would "lessen employment" and thereby act "as a boomerang against the very workers the law is set up to help." Furthermore, reports by the U.S. Department of Labor and International Labor Office of the League of Nations showed that Rhode Island already had the highest paid textile workers on the planet.

Nonetheless, McMahon ordered the new minimum wage of 35 cents per hour to go into effect in October 1937. Coincidently, according the state Department of Labor's monthly employment reports, from July 1937 when the proposed minimum wage was first announced to October 1937 when the directive went into effect, the Rhode Island textile industry reduced its workforce by over 10 percent. Other Rhode Island manufacturing industries, not directly impacted by this minimum wage directive, either grew or little changed the size of their workforce during this same time period.

Soon thereafter, in 1938, Congress enacted a national minimum wage law, under pressure from organized labor and Northern textile manufacturers, who could not compete with the low cost non- unionized labor in Southern mills. …