The Minimum Wage Fog


Harry Truman once asked for a one-armed economist in the hopes of never again having to hear “on the one hand, this” and “on the other hand, that.” Given the recent Congressional Budget Office (CBO) report on the effects of the minimum wage — one chock full of “on the other hands” — the American people can empathize with President Truman. Even worse, both sides of the aisle are spinning the report to claim victory, creating a fog around minimum wage policy that may further discourage a Walmart-influenced Congress from taking any action. Given the miserly state of the minimum wage today, such a can’t-do attitude is unacceptable. Here are five key observations about the minimum wage to help members of Congress see through the “something for everyone” fog generated by the report:

First, the Congressional Budget Office’s report on the effects of a minimum wage increase to $10.10 fails to reflect the modern economic consensus on a minimum wage raise’s employment effects. The weight of evidence from the economics literature has found that increases in overall business costs resulting from moderate wage increases are modest and can be absorbed by slight price increases, lower employee turnover costs, or adjusting distribution of companies’ total revenues. In fact, two recent meta-studies of dozens of papers over the past years — the first by economists Hristos Doucouliagos and T.D. Stanley in 2009 and the second by econometrics experts Paul Wolfson and Dale Belman in 2013 — have concluded that modest minimum wage increases have little to no significant negative employment effects.

Moreover, the stimulus effects of an increase in wages to at least $10 — monies likely to be spent promptly — could, according to the Economic Policy Institute create as many as 140,000 net new jobs over the three year phase-in period of the increase.

Second, the $10.10 an hour level by 2016 — which would, by the time it is fully implemented, have a real value of only $9.69 an hour in 2014 dollars — is modest relative to many minimum wage benchmarks. A minimum wage of $10.40 an hour by 2016 would set the minimum wage at half the median wage, which is a standard that the minimum wage levels of most Organisation for Economic Co-operation and Development (OECD) nations (as well as the United States itself in the 1960’s and 1970’s) meet. Over a hundred economists have lent their support to a minimum wage that catches up to the 1968 inflation-adjusted federal minimum wage, which would be $11.39 an hour by 2016.

A “March on Washington Wage” — one that reflects Martin Luther King Jr.’s demand of a $2 level in 1963, adjusted for inflation — would be $16.18 an hour by 2016. To put the minimum wage in perspective relative to the living wage, note that the living wage for one adult with one child living in House Speaker John Boehner’s Butler County, Ohio would be, according to the MIT Living Wage Calculator, $18.65 an hour by 2016.

Third, the media falsely reported that the tradeoffs associated with a minimum wage increase are roughly balanced between costs and benefits to different impoverished groups. In fact, the CBO report shows that, even with its outlier prediction of job loss, the change in real income of those making less than six times the poverty line is an increased $19 billion, lifting 900,000 people out of poverty and giving 16.5 million people raises.

Fourth, the partisan fight over the CBO report obscures the bipartisan nature of the minimum wage raise coalition. The most aggressive minimum wage effort in the country now is led by a conservative — Republican Ron Unz, who is pushing for a $12 minimum wage in California in an effort to ensure that Golden State taxpayers are not, in providing public assistance to those who already work full time, essentially subsidizing the low wages of big corporations. Bill O’Reilly, Phyllis Schlafly as well as a majority of Republicans polled join 80% of Americans in supporting a minimum wage increase.

Finally, the CBO Report, given its charter, has to avoid dealing with themoral case for a minimum wage. Raising, or more precisely, restoring the inflation-adjusted minimum wage to its level from forty-five years ago lifts human beings from poverty in our rich nation — a nation that has allowed its minimum wage level to fall way behind those of other western countries.

Corporate spin-masters thrive on the fog created by he-said-she-said economic policy debates. True, we must continue to deliberate to make sure all perspectives are heard, but we cannot let the debate obscure the glaring, shameful fact that 30 million Americans, despite being twice as productive as workers were 45 years ago, are making less today, adjusted for inflation than their mid-century counterparts. Congress must push forward through the fog and give workers a much-deserved restoration of a fair minimum wage level.

Read more about our efforts to raise the minimum wage at TimeForARaise.org.

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. Hopeless is also available in a Kindle edition.

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

November 24, 2015
Dave Lindorff
An Invisible US Hand Leading to War? Turkey’s Downing of a Russian Jet was an Act of Madness
Mike Whitney
Turkey Downs Russian Fighter to Draw NATO and US Deeper into Syrian Quagmire
Walter Clemens
Who Created This Monster?
Patrick Graham
Bombing ISIS Will Not Work
Lida Maxwell
Who Gets to Demand Safety?
Eric Draitser
Refugees as Weapons in a Propaganda War
David Rosen
Trump’s Enemies List: a Trial Balloon for More Repression?
Eric Mann
Playing Politics While the Planet Sizzles
Chris Gilbert
“Why Socialism?” Revisited: Reflections Inspired by Einstein’s Article
Charles Davis
NSA Spies on Venezuela’s Oil Company
Michael Barker
Democracy vs. Political Policing
Barry Lando
Shocked by Trump? Churchill Wanted to “Collar Them All”
Cal Winslow
When Workers Fight: the National Union of Healthcare Workers Wins Battle with Kaiser
Norman Pollack
Where Does It End?: Left Political Correctness
David Macaray
Companies Continue to Profit by Playing Dumb
Binoy Kampmark
Animals in Conflict: Diesel, Dobrynya and Sentimental Security
Dave Welsh
Defiant Haiti: “We Won’t Let You Steal These Elections!”
November 23, 2015
Vijay Prashad
The Doctrine of 9/11 Anti-Immigration
John Wight
After Paris: Hypocrisy and Mendacity Writ Large
Joseph G. Ramsey
No Excuses, No Exceptions: the Moral Imperative to Offer Refuge
Patrick Cockburn
ISIS Thrives on the Disunity of Its Enemies
Andrew Moss
The Message of Montgomery: 60 Years Later
Jim Green
James Hansen’s Nuclear Fantasies
Robert Koehler
The Absence of History in the Aftermath of Paris
Dave Lindorff
The US Media and Propaganda
Dave Randle
France and Martial Law
Gilbert Mercier
If We Are at War, Let’s Bring Back the Draft!
Alexey Malashenko
Putin’s Syrian Gambit
Binoy Kampmark
Closing the Door: US Politics and the Refugee Debate
Julian Vigo
A Brief Genealogy of Disappearance and Murder
John R. Hall
Stuck in the Middle With You
Barbara Nimri Aziz
McDonalds at 96th Street
David Rovics
At the Center of Rebellion: the Life and Music of Armand
Weekend Edition
November 20-22, 2015
Jason Hirthler
Paris and the Soldiers of the Caliphate: More War, More Blowback
Sam Husseini
The Left and Right Must Stop the Establishment’s Perpetual War Machine
Mike Whitney
Hillary’s War Whoop
Pepe Escobar
In the Fight Against ISIS, Russia Ain’t Taking No Prisoners
Ajamu Baraka
The Paris Attacks and the White Lives Matter Movement
Andrew Levine
The Clintons are Coming, the Clintons are Coming!
Linda Pentz Gunter
Let’s Call Them What They Are: Climate Liars
Paul Street
Verging on Plutocracy? Getting Real About the Unelected Dictatorship
Nur Arafeh
Strangling the Palestinian Economy
Patrick Howlett-Martin
The Paris Attacks: a Chronicle Foretold
Vijay Prashad
Rebuilding Syria With BRICS and Mortar
Brian Cloughley
Why US Defense Secretary Ashton Carter is the Biggest Threat to World Peace