More on the minimum wage

I've always been a strong proponent of a decent minimum wage. The previous post addressed that very topic, and the responses were so fine, I thought I would share them with a larger audience.

This comes from our friend Dan in Alabama:

San Francisco vs Alabama

San Francisco min wage: $10.55
Alabama min wage: $7.25

San Francisco unemployment rate: 6.5%
Alabama unemployment rate: 7.1%

San Francisco pays its workers at least 25% more and has less unemployment than Rock Hard Right Wing Alabama.

Sucks to be beat by a bunch of flaming Liberals don't it macho man!

Of course, life is more expensive in San Francisco. But that fact doesn't affect Dan's basic argument: According to Libertarian theology, unemployment should be much higher in the city by the Bay. Should be, but isn't.

Carolyn Kay sends the following, which originally appeared in ThinkProgress:

OOPS: GOP Rep. Inadvertently Makes The Case For Nearly Doubling The Minimum Wage

A stronger minimum wage, [Tennessee Rep. Marsha Blackburn (R) ] said, would negatively affect the ability of young workers to enter the workforce as teenagers, and would prevent them from learning responsibility like she did when she was a teenage retail employee making a seemingly-measly $2.15 an hour in Mississippi…

Making $2.15 an hour certainly does sound worse than today’s minimum wage, which federal law mandates must be at least $7.25 an hour. But what Blackburn didn’t realize is that she accidentally undermined her own argument, since the value of the dollar has changed immensely since her teenage years. Blackburn was born in 1952, so she likely took that retail job at some point between 1968 and 1970. And according to the Bureau of Labor Statistics’ inflation calculator, the $2.15 an hour Blackburn made then is worth somewhere between $12.72 and $14.18 an hour in today’s dollars, depending on which year she started.

At that time, the minimum wage was $1.60, equivalent to $10.56 in today’s terms. Today’s minimum wage is equivalent to just $1.10 an hour in 1968 dollars, meaning the teenage Blackburn managed to enter the workforce making almost double the wage she now says is keeping teenagers out of the workforce.

Youngsters may not understand that, back in the days when real wages (as measured in inflation-adjusted dollars) were higher, it was possible to get by on a part-time job.

A reader named romero sent the following:

From the post war period right up till 1975 wage increases for ordinary workers tracked US national productivity increases. Bureau of Labor Statistics figures show that from 1975 till the present productivity increased by a massive 154% while wages increased by a measly 13% in real terms. Workers are now working twice as hard for the same or even less pay than they were earning in 1975. So there is no question that the middle and working classes have been totally ripped off by employers and the wealthy. See here and here.

The current public debate on wage increases has focused on the benefits to the economy and that the impact on employer costs and unemployment numbers will be minimal. These secondary arguments fail to address the economic elephant in the room -- that workers have been systematically robbed for a generation of wage increases to which they are fully entitled and it's about time they started getting it. The cash is out there and they have been owed it for a long, long time. It's about wage justice, not affordability.

I've taken the liberty of reproducing the chart which shows the great disparity between rising productivity and stagnant wages. My first reaction was to say "What hath Reagan wrought?" -- but in truth, the gap began to widen under Carter, possibly Ford. Reagan, however, turned the crack into a canyon.

Paul Krugman has more to say today:

So what should you know? First, as John Schmitt (pdf) documents at length, there just isn’t any evidence that raising the minimum wage near current levels would reduce employment. And this is a really solid result, because there have been a *lot* of studies. We can argue about exactly why the simple Econ 101 story doesn’t seem to work, but it clearly doesn’t — which means that the supposed cost in terms of employment from seeking to raise low-wage workers’ earnings is a myth.

Second — and this is news to me — the usual notion that minimum wages and the Earned Income Tax Credit are competing ways to help low-wage workers is wrong. On the contrary, raising the minimum wage is a way to make the EITC work better, ensuring that its benefits go to workers rather than getting shared with employers.

On the other side of the aisle, Marco Rubio demonstrated a formidable talent for missing the obvious when he uttered these memorable words: “Minimum-wage laws have never worked in terms of helping the middle class attain more prosperity.”

Yes, and laws against horse theft have never worked in terms of helping us go the Moon. Pretty much by definition, a minimum wage job is not a middle class job. Now that election season has passed, perhaps it's time for us to stop pretending that middle class Americans are the only citizens who matter. In fact, if we define our terms with any rigor, most Americans do not belong to the middle class.

In this country, politicians speak of "the rich," "the middle class" and "the poor." And that's it. Those three categories are the only ones that enter our discourse. But everyone else in the world recognizes the existence of a thing called "the working class," a category which comes between the middle class and the impoverished. Not only are the "middlers" not in the majority -- the workers are more numerous -- they usually have a higher-than-average income, certainly higher than that of most workers.

This blog may soon have more to say on the subject of class. I re-read Paul Fussell a few months ago; the book must still be around here somewhere.