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Regulating wage increases doesn't raise worker's worth

The timing is noteworthy.

With big employers like Walmart and Target boosting their minimum starting pay recently, Pennsylvania Gov. Tom Wolf is shifting his focus away from the minimum wage to another target: mandatory overtime pay for salaried workers.

Wolf, a first-term Democrat preparing a re-election campaign in 2018, moved this week to boost pay in Pennsylvania by making hundreds of thousands of additional salaried employees eligible for overtime pay.

The governor’s new focus seems opportunistic and unnecessary. It might even be counterproductive.

The fact is, competent, qualified job candidates are in very high demand as a warming economy accelerates. Anyone with a modicum of basic skills, a fairly clean record and the ability to pass a drug test will have his or her pick of jobs, at a good starting pay that’s well above the current federal minimum wage of $7.25 an hour.

The groundswell of economic recovery predates the Trump administration. An umployment rate that peaked at 10.2 percent in 2009 had fallen to 5 percent by March 2016, when Wolf signed an executive order setting the state minimum wage at $10.15 an hour. It applied not only to all state employees but also to the employees of any company providing direct services to the state or leasing property from the state. For everyone else, the federal minimum wage of $7.25 per hour still applied.

The new wage went into effect Jan. 1, 2017 — the same month Donald Trump was inaugurated. Since then, the U.S. unemployment rate has continued to decrease steadily to its current 4.1 percent, the lowest unemployment rate in 17 years.

Walmart, the largest U.S. private employer with more than 1 million workers, announced a week ago that it will raise starting wages from $9 to $11 an hour and hand out employee bonuses ranging from $200 to $1,000. Company officials linked the move to recent tax reform approved by the Republican Congress and Trump. “Tax reform gives us the opportunity to be more competitive globally and to accelerate plans for the U.S.,” Walmart’s Chief Executive Douglas McMillon said.

But economists and other analysts say the demand for qualified workers had as much to do with the pay raises, if not more. Observers said Walmart almost had to raise wages now if it wanted to keep step with peers such as Target, which late last year raised its starting wage to $11 an hour, with plans to reach $15 by 2020.

“I would’ve been astounded if they hadn’t raised wages,” MIT economist Thomas Kochan told the Washington Post. “What’s impossible to sort out is how much of this is because of savings from the tax cuts, and how much is because of pressure they’re receiving from employees and labor groups.”

Suffice it to say that employers will be obliged to sweeten their offerings to attract and retain good employees. With a minimum-wage increase already being accomplished, look for other forms of generosity to develop — including things like overtime compensation for salaried workers.

It’s a free-market principle that skilled, capable employees are paid the wage they command, not an arbitrary rate set by government regulation.

If elected state officials feel sincerely compelled to have an impact on the economy, maybe they should focus on the availability of job candidates — assessing why small segments of the population are chronically unemployed and ameliorating the conditions that render these segments unemployable. They are not made more valuable as employees simply because government requires a higher wage for them.

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