Bring it on: Battle over minimum wage is underway

Posted by Greg Sargent

That was quick. John Boehner just shot down Obama’s proposal to hike the federal minimum wage to $9.00 per hour. His rationale was a familiar one.

“When you raise the price of employement, guess what happens? You get less of it,” Boehner said...I asked Boehner spokesman Michael Steel to back up Boehner’s claim. He sent me two things. First, a statement from the National Federation of Independent Businesses (historically a GOP-aligned group) which concluded: “A higher federal minimum wage will do the opposite of what he intends. It will hurt workers, job creation and the economic growth that is so critical — the growth that must come from the small-business sector.” He also sent an article by Forbes writer Bill Dunkleberg concluding the minimum wage kills jobs...But there is plenty of scholarship out there that directly challenges the view echoed by Boehner. The left-leaning Center for American Progress recently surveyed a raft of academic studies on the impact of the minimum wage and found that they showed that minimum wage hikes boost workers’ wages but don’t materially hike unemployment — even amid bad economic times. CAP summarized the reasons for this as follows:

Studies generally find that policies that increase the compensation of low-wage workers significantly reduce turnover, boost worker effort, encourage employers to invest in training for their workers, and can increase demand for goods and services — all of which help balance out any potential negative effects.

In other words, when workers are better compensated, they give more to their employers, stick around the job longer, and spend more money. Other economists have endorsed some of the research surveyed by CAP. Meanwhile, the liberal Economic Policy Institute has released a statement signed by many prominent economists endorsing the Council of Economic Advisers’ 1999 finding that “the weight of the evidence suggests that modest increases in the minimum wage have very little or no effect on employment.”

The substance of the issue aside, this is a good fight for Democrats to have. It highlights one of the most important questions about our economy right now: With corporate profits at record highs, why are wages and other compensation falling, and why are workers being left behind? And it shifts the argument on to good political terrain for Dems, too...The debate also provides an opening for Dems to ask a question: If Republicans oppose raising the minimum wage, what specific actions by government do they support to improve social mobility? In other words, what, if anything, do Republicans think government should do to help struggling Americans climb that “ladder” that Boehner referred to — or to access the lowest rung of that ladder in the first place? This argument could help highlight the GOP’s ongoing struggle to articulate a positive role for government to play in improving people’s lives.

http://www.washingtonpost.com/blogs/plum-line/wp/2013/02/13/bring-it-on-battle-over-minimum-wage-is-underway/

Statement by EPI President Lawrence Mishel on President Obama’s support for a higher minimum wage

By Lawrence Mishel

The president’s support for a higher minimum wage is a welcomed opening to the policy conversation that’s needed about getting wages growing again, after stagnating for the last ten years among both college and high school graduates. The proposed increase will benefit 21 million workers and increase wages by $22 billion by 2015. This will not only boost wages but facilitate greater job growth by increasing spending by low-wage workers.

http://www.epi.org/publication/statement-epi-minimum-wage/