Wednesday, June 21, 2006

What Kevin Says - Increase the Minumum Wage

The idea that somehow an increase to the absolute bottom of the employment ladder is bad for the economy and the nation doesn't pass the sniff test. As Kevin Drum says,

Republicans should be ashamed of themselves for blocking a minimum wage increase for the past decade, Anything that makes them squirm over this is a good idea. sending it to an all-time postwar low.

There are arguments against raising the minimum wage, of course, and the usual one is an appeal to simple economics: if the price of unskilled labor goes up, then the demand for unskilled labor will go down. Low-wage workers will be laid off and unemployment among the minimum wage population will go up.

This is technically correct, but it delicately avoids saying anything about magnitudes, which is what really matters. Does unemployment go up 5% after increasing the minimum wage a dollar, or does it go up .01%? And are there countervailing factors that affect this, human beings not being pig iron ingots, after all?

This really can't be settled by an appeal to theory. Empirical studies are what matters, and they mostly seem to show that modest minimum wage increases have either no effect on low-wage employment or else a very tiny effect, most of it centered on teenagers, not adults. A long history of changes to the minimum wage at the state, local, and national level in the United States, for example, gives little reason to think that small increases in the minimum wage have any serious negative impact — but does suggest that these changes have, in fact, increased the wages of the working poor...

At this point, the bulk of the evidence suggests that modest minimum wage increases (a) provide a measurable benefit for poor workers, (b) have little or no impact on employment levels, and (c) are paid for by the customers of low-wage industries, which means the cost is broadly dispersed among all of us.

So, given that the benefits are clear and the harm appears to be minimal or zero, I think it's now up to minimum wage opponents to make a clear empirical case against raising the minimum wage if they want to be taken seriously... I'll change my mind if minimum wage opponents can point to a serious recent literature review suggesting a consensus that the minimum wage hurts more than it helps, but until then count me as a supporter.

It really is a joke that people think raising the minimum wage is a losing issue for the Democrats. The unspoken fear of the Rethuglicans, of course, is that wages will go up... and nothing bad will happen. Well, nothing unless you are a member of the "investment class" who will have to give up a few slivers of a percentage point of profits in order to treat ordinary people as something other than trash.

Raising the minimum wage does a few things. It acts as mild pressure upwards on all wages, particularly for unskilled hourly workers. That is a good thing, considering the slide in the housing bubble. It also sets the precendent that the Democrats can act directly and unequivocally to help the most vulnerable people in society. Finally, it firmly distinguishes Democrats from the greedy, hateful, classist actions of the Rethugs.

However, this does need to be tied to immigration, precisely because the Rethugs are allowing their business buddies to undercut the wages of working class men and women by refusing to enforce employment laws designed to keep immigrants from illegally taking jobs that Americans did for decades before the pay and working conditions were trashed. Immigration is good for the nation. Hiring illegal workers to try to have a foully paid workforce you can threaten and bully is unacceptable.

The refusal to pay legal US workers decent money and the deliberate employment of illegal workers are two sides of the same coin. Treating US workers with dignity, whether they were born here or have come here, should be a no-brainer commitment from the Democrats.


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