Raising The Floor
Increase the Minimum Wage
From Congress to Concord, Democrats are talking about raising the minimum wage . No doubt this is in part an attempt to change the national conversation from Topic A for the past three months, the rocky rollout of Obamacare. The minimum wage addresses an issue where they believe they have the upper hand — income inequality.
Indeed, a minimum-wage increase is calculated to put Republican leaders in Congress and in statehouses across the country on the defensive, as well as damage GOP candidates in this fall’s elections. That’s because despite their opposition, there’s widespread public support for raising the minimum wage. According to a CBS News poll in November, 64 percent of independents said they supported raising the minimum wage, as did 70 percent of those who described themselves as moderates. Those would be potential swing voters, whom both parties try hard to attract. (Far more surprising is that the same poll found 57 percent of Republicans also backed a minimum-wage increase.)
In Washington, the Obama administration and congressional Democrats are proposing to raise the federal minimum wage from $7.25 an hour to $10.10 by 2015. In New Hampshire, state Rep. Sally Kelly, a Chichester Democrat, is sponsoring a bill to re-establish a state minimum wage, which was repealed in 2011, leaving New Hampshire with the federal minimum wage. Kelly’s bill would set the minimum wage at $8.25 an hour in 2015 and raise it to $9 per hour the next year. It would then be pegged to the cost of living. In Vermont, the New Year saw the state’s minimum wage go up by 13 cents an hour, to $8.73.
While it’s easy to understand just how effective a minimum wage increase could be as a political lever, it would be a shame if it becomes an entirely partisan issue. There are many reasons to embrace an increase that have little to do with politics.
A prime one is that it addresses growing income inequality precisely where the rubber meets the road. Nearly 60 percent of minimum-wage workers toil in food service or retail sales — a sector of the workforce that has been especially hard hit in recent decades. Inflation-adjusted wages of nonsupervisory workers in the retail trade have fallen by almost 30 percent since 1973. An increase to $10.10 an hour promises to raise the living standards of thousands of those categorized as the working poor.
There’s also a well-founded argument that because the minimum-wage provides a floor below which employers cannot go, raising that floor eventually causes the wages paid to those above it to rise in proportion, spreading the benefits more widely across the economy. The Economic Policy Institute estimates that 30 million workers would benefit directly or indirectly from an increase in the federal minimum wage from $7.25 to $10.10.
The other side of the minimum-wage coin, of course, is the argument that increasing it will cost current and future jobs, making it harder for entry-level workers to gain a foothold, as U.S. Sen. Kelly Ayotte of New Hampshire told the Concord Monitor recently. At some level that certainly might be the case, but we doubt that $10.10 an hour is that level. First, minimum-wage jobs are generally not subject to foreign competition. Outsourcing a position flipping burgers is not an option, and that applies to many such jobs. Second, there have been a number of academic studies that looked at employment in counties where the minimum wage had risen and adjoining ones in neighboring states where it did not go up. These studies found that the adverse effect of an increase was minimal to nonexistent.
A higher minimum wage is by no means a comprehensive solution to what ails the American workforce. That would require a thoughtful re-evaluation of what technology and globalization have wrought and a strategy for countering their ill effects. But it would be a practical step up for millions of workers on the lower rungs of the employment ladder. As a matter of fairness and justice, raising the floor is the right thing to do.