Tags: Puerto Rico | minimum | wage | havoc

WaPo's Lane: Puerto Rico's Minimum Wage Rise Hurt Economy

By    |   Tuesday, 14 Jul 2015 08:06 AM

Puerto Rico's experience with an increase in the minimum wage hasn't been a happy one, writes Washington Post columnist Charles Lane.

In 1974, Congress ordered Puerto Rico, a U.S. territory, to boost its minimum wage to equal that of the mainland. That was phased in by 1983, and the Puerto Rican minimum wage has matched the U.S. minimum ever since.

"The results were sharply disruptive, according to a 1992 National Bureau of Economic Research analysis," Lane writes. "They included 'substantially reduced employment on the island' and mass migration of suddenly unemployable lower-skilled workers to the U.S. mainland."

High wages for low-skilled workers made companies reluctant to invest and hire, especially in the labor-intensive tourism sector, which competes with hotels of lower-wage Caribbean islands, Lane explains.

There may be a lesson here for the United States, he says. "The island’s experience with the minimum wage and other labor-market regulations is an instructive tale, the clear moral of which is to proceed with caution."

Elsewhere on the U.S. job front, more and more of us are working as freelancers, and that translates into more and more of us worrying about job security.

The number of job categories populated mostly by independent contractors soared to 32 million, or 18 percent of all jobs, in 2014 from 20 million in 2001, according to Economic Modeling Specialists, a labor research firm, The New York Times reports.

As for the increased worry, a Gallup poll last year showed that 23 percent of Americans were concerned that their work hours would be pared up from the low to mid-teens percent in the years before the 2007-09 recession.

“In the past, firms overstaffed and offered workers stable hours,” Susan Houseman, a labor economist at the Upjohn Institute for Employment Research, told The Times. “All of these new staffing models mean shifting risk onto workers, making work less secure.”

The upshot of all this is a “transformation that promises new efficiencies and greater flexibility for ‘employers’ and ‘employees’ alike, but which threatens to undermine the very foundation upon which middle-class America was built,” venture capitalist Nick Hanauer and labor leader David Rolf write in Democracy Journal.

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Puerto Rico's experience with an increase in the minimum wage hasn't been a happy one, writes Washington Post columnist Charles Lane.
Puerto Rico, minimum, wage, havoc
Tuesday, 14 Jul 2015 08:06 AM
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