The Daily Sandwich

"We have to learn the lesson that intellectual honesty is fundamental for everything we cherish." -Sir Karl Popper

Location: Boston, Massachusetts, United States


Tuesday, June 20, 2006

Congress got a pay hike-- how about the working poor?

The last minimum wage increase was close to a decade ago, and nationally workers' salaries haven't been keeping up with price increases. The GOP loves to argue that this would wreck the economy, mean lost jobs, and lead to a slippery slope where lazy, poor people are suddenly earning ten-- then twenty!-- dollars an hour. Not that there's any evidence for this commie victimization of America's executives.

The question that has received the most scrutiny is whether increases in the minimum wage lead employers to lay workers off. You probably don't want to hear the results from me, but here's how Nobel laureate in economics, Robert Solow, put it: "The main thing about this research is that the evidence of job loss is weak. And the fact that the evidence is weak suggests that the impact on jobs is small."

A great example comes from the last Federal minimum wage increase, back in 1996-97. The usual suspects predicted massive job losses among those affected by the increase from $4.25 to the current level of $5.15. Instead, low-wage workers experienced the strongest job market in 30 years. Poverty fell to historic lows, particularly for the most disadvantaged workers, such as less-skilled minorities and single-mothers.

On the other hand, there no such body of evidence supporting your claims that cutting taxes for the rich actually accomplishes anything beyond distributing wealth up to the scale. Did I mention that profits as a share of national income are at a 39-year high?

UPDATE: Wouldn't you know it? The GOP is countering the minimum wage increase bill with a minimum wage increase bill of their own-- that would, naturally, lower wages for millions.