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