August 29, 2019 at 10:32 am by David Cooper
Raising the federal minimum wage isn’t just the right thing to do for workers—it’s also good for the economy
Raising the federal minimum wage, which has now lapsed for the longest ever period without an increase, will benefit millions of low income workers and lift more than one million Americans out of poverty.
There is widespread agreement in the economics profession these days that, in contrast to outdated textbook theories, higher minimum wages have done exactly what they’re supposed to do: raise pay for low-wage workers with little, if any, effect on employment.
That’s why it was surprising to see Mitch Albom, a millionaire fiction author and sports columnist, argue so vocally and misguidedly against the prospect of an increase in a recent opinion piece in the Detroit Free Press.
The Raise the Wage Act, which boosts the minimum wage from the current paltry $7.25 per hour to $15 an hour by 2025, has passed the House of Representatives, but Senate Majority Leader Mitch McConnell refuses to even bring it up for a vote in the Senate.
Disappointingly, Albom repeats a lot of conservative tropes that have little foundation in evidence or data.
Let’s start with his premise: Albom takes Michigan Congresswoman Rashida Tlaib to task for proposing that the minimum wage should actually be raised to $20.
“While raising people out of poverty should be a top priority, getting folks excited about a $20-an-hour minimum wage is not only irresponsible, it’s not well thought out,” Albom writes.
“You can force businesses to raise wages, but you can’t force them to keep workers. And study after study, expert after expert, shows that, eventually, the higher the wages demanded, the fewer positions there will be.”
The problem is both these statements are factually incorrect. A $15 minimum wage is ambitious only because of how long lawmakers have let the federal minimum wage stagnate at unlivable levels. Had the federal minimum wage been raised since the 1960s at the pace of rising labor productivity, it would be over $20 an hour today.
Raising the minimum wage to more livable levels is enormously important to the health of an economy that relies on consumer spending for two-thirds of its strength. It is also a modest but important step in narrowing shamefully large gaps in wages and income between rich and poor Americans.
What’s more, Representative Tlaib is right that $15 is just a bare minimum. A full-time earner at $15 an hour makes $31,000 a year—not nearly enough to afford a secure standard of living in any region of the country, but especially not in a large metropolitan area like Detroit.
As for “study after study, expert after expert,” Albom does not appear to have kept up with the academic literature. Both the average study and the most sophisticated peer-reviewed studies find little to no impact on jobs from higher minimum wages. Even the Congressional Budget Office report he cites is misinterpreted.
What the CBO actually found was that CBO that $15 by 2025 would raise the wages of up to 27.3 million low-wage workers, would increase by $21.9 billion the income of families who earn below three times the poverty rate, and would reduce the number of people living in poverty by 1.3 million, nearly half of them ages 0–18.
Which brings us to the opening of Albom’s column, where he glibly likens Tlaib’s comments on the minimum wage to Herbert Hoover’s famed “chicken in every pot” promise. “A year later, we had a Great Depression,” Albom writes, hyperbolically.
That’s not quite how it went down. But without needing to dig back into 1930s history, it’s a poor—and ironic—comparison for Albom to make. Hoover was a laissez faire conservative whose faith in markets over government regulation (such as a fair minimum wage) came tumbling down on his legacy.
Tlaib’s policy stance is much more akin to that of Hoover’s successor, Franklin Delano Roosevelt. She clearly understands that making the economy work for working people, rather than just allowing wealth and privilege to accumulate at the very top of the income scale, is not only the right thing to do but also the best thing for the American economy.TAGGED Minimum wage