OP-ED: Minimum Wage Is All The Rage
In a world of 30 second TV ads, poll-tested candidates and focus group-approved sound bites, facts seem to play a dwindling role in political campaigns. In the race for Connecticut’s U.S. Senate seat, candidates Linda McMahon and Richard Blumenthal have traded barbs in recent weeks over the minimum wage. Federal candidates discussing the minimum wage might seem a bit comical, given that the Connecticut minimum wage of $8.25 an hour makes the federally-mandated $7.25 an hour minimum a moot point.
Nonetheless, a federally-mandated price floor for hourly labor, the minimum wage, has been a hotly debated topic since it was first implemented in the Fair Labor Standards Act of 1938. Economists, for their part, spent most of the 20th century widely accepting the view that raising the minimum wage also increased unemployment. In February 1995, the Joint Economic Committee of the U.S. Congress released a document entitled “50 Years of Research on the Minimum Wage” in which they enumerated 91 research studies that supported such a view.
Three Ivy League economists – Alan Krueger, David Card, and Lawrence Katz – published research in the early 1990s that challenged this conventional wisdom, instead finding that minimum wage increases had no effect on employment. Economists, politicians, and activists have sparred over the results ever since.
For its part, though, Congress took no further action on the minimum wage until the spring of 2007 when Congressional Democrats passed and Republican President George W. Bush signed a law increasing the federal minimum wage from $5.15 an hour to $7.25 an hour over two years.
Federal statistics paint a picture of minimum wage workers that is decidedly different than that described by advocates of the policy. More than 48 percent are between 16 and 24 years old. An estimated 80 percent are white and 63.9 percent are part-time workers. In Connecticut, of the 866,000 workers who held jobs paying an hourly wage in 2009, just 25,000 people worked at or below the prevailing federal minimum wage.
In the context of the U.S. Senate race then, the debate over the specifics of raising or lowering the minimum wage seems to matter very little.
The issue instead serves, albeit poorly, as a proxy discussion for the best way to help working families, particularly during the difficult economic environment. Simply forcing employers to pay higher wages, liberals argue, is the surest and most direct way to put more money in the pockets.
Conservatives counter that the real focus should be on increasing the amount of disposable income available to workers, a task best accomplished not by artificially inflating the price of labor but rather by reducing taxes and by increasing competition to reduce the cost of goods and services for consumers.
The argument isn’t just advantageous for highlighting each philosophy’s approach to helping people. It also allows for a reprise of the thematic narratives that conservatives and liberals often use to characterize the other’s position.
For liberals, the most popular explanations for disagreement are twofold: opponents are either mean or ignorant. Denying workers the ability to get just a little bit more in a paycheck can only be a byproduct of the greed of mean employers who don’t want to share their wealth or of the foolish ignorance of people too dumb to realize that they oppose a policy that would benefit them.
Conservatives, on the other hand, attribute liberal attitudes to naiveté. Attempting to force the world to behave in a certain fashion too often has the effect of causing unintended consequences that are worse than the original problem. Changes in the cost of labor, for example, also alter the arithmetic of the marginal rate of technical substitution – the point at which units of capital, like investments in technology, are substituted for units of labor. Mandatory higher wages are of little use to employees if it becomes cheaper to replace them with a machine that will do it less expensively.
Like many public policy questions, there are no easy answers to these questions. As people running to craft public policy, the U.S. Senate candidates should be in the midst of a robust and thoughtful discussion of the issue. That the contest has been dominated instead by empty rhetoric should be of grave concern to the voters.
Heath W. Fahle is a policy analyst and consultant based in Manchester. His background in political campaigns includes work for former U.S. Rep. Rob Simmons and the Connecticut Republican Party. He also is the principal of Revolutionary Strategies LLC, a website design and consulting firm. Learn more at www.heathwfahle.com.