Raise the minimum wage
The Washington Post, February 6, 2013
Want more proof that the boundaries of debate in American politics are absurdly narrow and unequal to our challenges? Then ask yourself why an overdue, common-sense increase in the minimum wage is not on the agenda of either the president or the "new and improved" Republican party.
While Eric Cantor feebly tries to rebrand the GOP this week, and President Obama maneuvers to sidestep the sequester he signed into law in 2011, millions of America's working poor continue to languish. The federal minimum wage has been stuck at $7.25 since 2009. In 1968, the minimum wage was worth $10.47 in today's dollars. According to the Organization for Economic Co-operation and Development, the United States is near the bottom of advanced nations when it comes to the ratio of the minimum wage to the median wage. In Australia, the minimum wage now tops $15, and unemployment is 5.4 percent.
With facts like these—and a payroll tax hike that just took $100 billion a year mostly out of the pockets of ordinary workers—you'd think Obama would be leading the charge to give low-income workers a raise. Yet after pledging in his 2008 campaign to lift the minimum to $9.50 by 2011, he's barely uttered a peep. As Ralph Nader told me Tuesday, "There's a big difference between being on the record and on the ramparts."
It's no surprise that Nader, 78 years old and still fighting the good fight, worked with a couple of dozen liberal Democrats in Congress last year on a bill to lift the minimum to $10. That would still be below 1968's level, but it would represent a $5,000-plus raise for close to 30 million workers at or near the minimum today (it would also add $25 billion to gross domestic product, according to the Economic Policy Institute). That bill went nowhere without White House leadership; even a lunch-bucket Democrat like Tom Harkin refused to hold hearings on the idea.
But the fascinating thing is that Ron Unz, the eclectic libertarian activist who publishes the American Conservative magazine, is seeing Nader's $10 and raising him to $12. In a smart paper on the topic for the New America Foundation, Unz argues that it's time to admit that for average workers, "decades of economic policy have largely failed."
"Our government," Unz writes, "has sought to ensure a decent living for American workers through an enormous array of income subsidies, public benefits, training programs, and educational loans; at this point, many of these components have accumulated powerful and parasitic side-beneficiaries while leaving the working class behind.
"Since this vast and leaky conglomeration has failed at its intended goal," he concludes, "perhaps we should just try raising wages instead." Especially when so many of today's low-wage jobs, which are growing as a share of total employment, are in the nontradable service sector. That means they can't be offshored. And many are the kind of "high-touch" jobs—think home health care or child care aides—where higher wages won't lead to automation.
The assumption that corporate America is united against a higher minimum wage is wrong. Carl Camden, chief executive of Kelly Services (and co-chair of the Committee for Economic Development, the business-led think tank), tells me he supports raising the minimum wage and indexing it to inflation (something Mitt Romney supported in the campaign). "We have to focus on the issue of quality of jobs," Camden says. "We need to make it meaningful to work."
Nick Hanauer, a Seattle-based entrepreneur and venture capitalist, says we ought to be shooting for $15 an hour. "It would stimulate the economy, narrow the gap between rich and poor, and end the ridiculous subsidization of private low-wage companies by taxpayers," he says.
"Part of the answer," says Gray Davis, the former governor of California who is thoughtful on these questions, "will be convincing people to pay a little bit more for things so that Americans can have jobs that pay a decent wage."
There are different ways to skin this cat. In my 2003 book, "The Two Percent Solution," I argued that the minimum reward for work in America should be $10 an hour plus health coverage. That would be $12.50 today. Whether we pick $12, $15 or some other number, the question is how best to share the cost of achieving this decent minimum among employers, taxpayers (via subsidies for low-wage work) and consumers (via slightly higher prices).
A rational political process would debate the pros and cons of different combinations of these options. We don't have a rational political process. But we can't continue to do nothing.
Yes, we'll need exemptions to the new minimum for young trainees, restaurant workers and some others. And to be fair to the president, his first term involved so much crisis management that putting off this fight was arguably defensible.
But no more. Obama should call for a serious minimum wage hike in his State of the Union address next week. And Republicans embracing Cantor's call to "make life work for more working people" should read the Unz paper (as well as the polls) to see why this is something Washington can agree on to improve the lives of millions of struggling families.