All signs point to the minimum wage being a major issue in 2014.
In case you missed it, a major push to raise the federal minimum wage from its current rate of $7.25 an hour has just gotten underway. While many unions and other advocacy organizations have been pushing the idea of raising the minimum wage for a while now, a number of fast food strikes and other protests have helped to create a new urgency, and press coverage, around the push to raise it for the first time since 2009.
The idea of a legally guaranteed hourly minimum wage for workers has long been a contentious policy issue. To many ideological liberals the minimum wage is a good idea because it puts money into the pockets of the working poor who need it most, who then in turn spend it, resulting in a boost in the overall national economy. In short, it’s a win-win. To many ideological conservatives, the minimum wage perversely harms the poor and marginalized in society by artificially increasing wages that employers have to pay, who then in turn hire fewer people thus reducing the number of jobs available to the working poor.
In addition to these ideological disputes, minimum wage policy is one of the most widely studied and argued issues in economics. This is largely because it is such a controversial issue, so easy for non-economists to understand, and has been the subject of political arguments by famous economists like Milton Friedman over the years. I won’t go into the boring research details but suffice to say that if you want to find studies that prove that your side is “right” about the minimum wage, there’s plenty of ammo out there for you.
But while the idea of a minimum wage may be controversial in intellectual circles, in the political area it has been and remains widely popular, with even a majority of self-described Republicans supporting raising it to $9 an hour in a recent Gallup poll. At the same time the modern Republican Party, especially in its activist and donor bases, remains heavily opposed to raising it.
In another time and place a deal might be able to be cut in Washington where Democrats would get their minimum wage increase and Republicans would get something that they want as well, like offsetting tax breaks for small businesses. In fact, this is largely what happened in 2007 when the newly elected Democratic Congress agreed to such a deal with then President George W. Bush. And while many would welcome such a deal today, the new Republican Party, with its perverse incentives and a dysfunctional conservative information feedback loop, makes cutting a deal to raise the minimum wage in this period of divided government difficult to say the least.
The result of this is that the issue of raising the minimum wage, like the ongoing calamity of unemployment, won’t be going away anytime soon. Instead, Democrats will likely use it as an issue to attack Republicans as we move towards the 2014 midterm elections. In addition, it will likely be an issue in state and local elections as politicians in state legislatures and some large cities move to implement minimum wage hikes of their own in light of inaction on the federal level.
Now the obvious way out of this political trap is for Republicans to agree to work on a hugely popular issue as this would moderate their extreme image and show them to a be a sensible party that can work on ordinary people’s everyday concerns. Unfortunately, we are living in the age of shutdowns and debt limit hostage taking, so this doesn’t look likely. But we can always hope for the best.
Photo CT Senate Democrats/Flickr
When you add the numbers who have left the work force and are no longer part of the documented “unemployed” who no longer receive benefits, along with taking out the part time jobs as employed, we’re actually looking at a rate around 13%, though I have heard higher numbers. Looking at these numbers with the fact that the labor force in October in October is now at the lowest in 35 years. I guess I’m not too strange to again say, We need jobs.
We need jobs, which is why we need to raise the minimum wage in order to put more money into the hands of people who’ll spend it. Demand is what creates jobs, after all.
Minimum wage need not change. They key word is minimum.. we all started some where. If you need more money well then go to school, beter youself. There are three way to make it #1work for it #2 inherit It #3 win it.The only way you will appreciate It, is to work for it..
I can’t wait until they make it $50 an hour so we won’t have any more poverty! It will be awesome! Time to stick it to those greedy corporations and those fat cat Republicans!
Hi Scott,
The fact that raising the minimum wage to $50 an hour would be economically foolish does not mean that the policy itself or raising it at all is automatically also foolish. Having a speed limit is a good idea, even if setting it at 5 mph on the interstate is taking it too far. But I’d like to know what policies would you favor instead of raising the minimum wage? Higher EITC or something like that?
Ah yes, the totally unrelated analogy…. as if an economic policy has anything to do with a speed limit… If raising it to $50 is foolish, why is any other number any less foolish? What about $30? $25? Who is to say what is, or what is not a foolish number? Why is $50 foolish anyway? It simply gives people more money to spend in their local economies, spurring the entire engine onwards. The whole concept of a national minimum wage itself is foolish, there is no possible policy that anyone could even theorize that works for a nation of… Read more »
I think it’s pretty clear that creating a minimum wage of say $50 dollars and hour would lead to large scale inflationary pressure, while there is no real evidence that a smaller increase up to say $9 and hour would as well. After all there was no large scale inflation when it last went up in 2009. Since nobody is actually proposing to raise it to raise it to $20 or $50 and hour this is obviously a non-issue. If you want an more in depth take on the economics of this I would suggest this Yglesias post from earlier… Read more »
You just did the appropriate thought experiment but you do not believe the results.
Well the empirical data is pretty clearly on my side so I honestly don’t get what we are arguing about. Do you think if we raised the minimum to $7.29 an hour there would be lots of inflation and lots of job loss? If no, then raising it is clearly fine, the question becomes how much to raise to it. The minimum wage in the 60’s was a lot higher than it is today adjusted for inflation. We could probably go back to that level or (maybe even higher) without any major side affects other than raising the take home… Read more »
People need to learn to live within their means. If people need charity, then the charitable people,
like myself, must step up to the plate and look after the needs of the helpless. But it is psychotic to suppose that the workings of economics stop just because we as liberals and communists think it is unfair that the less productive get paid less.
I certainly hope this is the next major topic in political discourse. Too many people seem to think the wage problem can be solved by people “merely” getting better skills by going back to school, which completely ignores other little obligations liking keeping a family fed & housed, or the small issue of how to afford tuition on minimum wage (particularly ironic given how many of the people with this view would happily strip funding and financial aid from these same prospective students). Makes me wish we’d open ourselves up to advice and ideas from countries who do this shit… Read more »
Why in the world should someone be paying for college tuition on a minimum wage? Or trying to keep a family fed and housed on a minimum wage? Those are bogus straw men arguments. It is MINIMUM wage, as in the starting point, the bottom end of the scale, the place no one stays for long, etc…