Mar 8, 2014
Raise the Minimum Wage
Posted on Dec 6, 2013
Now that President Obama has outlined the crisis in economic mobility, he should begin by pressing his demand that Congress raise the minimum wage—and not by a little, but a lot.
Obama’s speech Wednesday about the need to redress growing inequality was sweeping and comprehensive—perhaps to a fault. In outlining solutions, he talked about the minimum wage. But he also mentioned immigration reform, rewriting the corporate tax code, eliminating the “sequester” budget cuts, holding down tuition costs for higher education, providing universal preschool, retraining the long-term unemployed, creating “Promise Zones” in poor communities ... the list goes on.
All are worthy goals, but what chance is there of getting such an ambitious agenda through Congress? The Republican majority in the House disagrees with Obama philosophically and opposes him reflexively; if he’s for it, they’re against it.
We know from the debt-ceiling fight, however, that House Republicans can be induced to do the right thing—if the political cost of doing the wrong thing is unacceptably high. And this looks like an issue on which Obama and the Democrats should be able to get real traction.
The federal minimum wage of $7.25 an hour is shamefully low compared to minimum wage levels in other industrialized countries—nearly $13 in France, for example, and around $10 in Britain and Canada.
Apparently, nobody told all this to the Australians. Unemployment there is 5.7 percent, versus 7.3 percent in the United States. The Australian economy escaped the Great Recession of 2007-08, and in fact hasn’t seen any kind of recession in 20 years. (Oh, and Australia has universal health care, too, but perhaps that’s another column.)
The caveat is that Australia has benefited hugely from China’s insatiable demand for its minerals and other natural resources. But if conservative economists are right, there still ought to be some discernible negative impact from such a high minimum wage, and I can’t find it. To the contrary, Australia is a solidly—and proudly—middle-class country. It seemed to me, on a recent visit, to be a place where the dignity of work is recognized in a way that it once was in the United States.
In the economic sense, raising the minimum wage would put more money into the pockets of those who now must be classified as the “working poor.” That phrase really should be an oxymoron; anyone who works full-time ought to be able to earn a living. But just try to live on $7.25 an hour.
Low-wage workers often have to take a second or even a third job to be able to afford the necessities—rent, food, clothing, health care. Creativity and initiative are stifled by the need to work such grueling hours just to stay in place.
Conservatives complain about growing dependence on government benefits—the infamous “47 percent” theory that got Mitt Romney in such trouble. But if you force people to work for $7.25 hour, you’re basically guaranteeing that they need a range of government help: food stamps, housing assistance, tax credits and so forth. Conservatives also say they worry about the weakening of family structure. I can think of nothing that would do more to strengthen low-income families than paying them a living wage.
The reason we have a problem with rising inequality and declining economic mobility is that low-end wages have stagnated while high-end compensation has soared. The standard Republican objection is that raising the minimum wage will hurt small businesses, but I believe these businesses will adjust—and that many will thrive, since more people will be able to afford their goods and services.
President Obama should specify a number—at least $10 an hour—and go out on one of his barnstorming tours. Democrats should make the issue a central theme of the 2014 campaign. I believe the public will respond, which means that, ultimately, Republicans will respond.
The president has a long agenda. This is where he should start.
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