President Obama signed an executive order on Wednesday raising the minimum wage for some federally contracted workers to $10.10. This move illustrates the fact that we need a higher minimum wage for all workers. It also promotes the bill by Sen. Tom Harkin and Rep. George Miller that would raise the minimum wage to $10.10 by 2015.
Make no mistake: The President’s gesture was a good one, and the Harkin/Miller bill is very important. But, as is so often the case nowadays, strategists on the left run the risk of prematurely accepting preconceptions about what is “politically possible.” If economic debate becomes strictly a defensive game fon the left, the “Overton window” of acceptable debate will keep shifting toward the right.
The minimum wage is an excellent case in point. There are strong arguments for raising it even more – perhaps considerably more – than is currently being discussed, and the independent left should be making them.
Here are ten reasons why “$10.10” should be a floor, not a ceiling, in discussions of the minimum wage.
1. It keeps up with inflation – but not entirely.
Compared to the 1968 minimum wage, $10.10 is enough to keep up with inflation – more or less. But it doesn’t make up for the many years in which minimum wage workers fell behind. Those years often led to increased debt, lost educational opportunities, and other forms of deprivation.
2. We’re lagging behind other industrialized countries.
The U.S. minimum wage is well behind that of most other industrialized countries. Even at $10.10, we would be laggards compared with most of our peers. (But not all of them. To use the vernacular: In your face, Slovak Republic!)
Our current minimum wage is roughly 40 percent of the median national income. We would have to raise it to roughly $10.88, effective immediately, to equal France’s. And don’t we want to do even better than that? (Source: International Labor Organization)
Where’s that American exceptionalism when we need it?
3. If the minimum wage had kept pace with productivity, it would be $21.72 today.
The Harkin/Miller bill would peg the minimum wage to inflation in future years. But there’s a very strong argument for tying it to productivity instead. That’s what the minimum wage did in the years between 1947 and 1968, as economist Dean Baker regularly points out. (Source: Dean Baker, CEPR)
If the minimum wage were based on productivity increases from 1968 to today, it would be more than $21 per hour. (Source: John Schmitt, CEPR)
Corporations would have us believe that even a modest minimum wage tied to inflation would stifle growth and lead to increased joblessness. And yet, during the decades that the minimum wage rose even higher, with productivity, we experienced an average of 4 percent annual GDP growth and 4 percent unemployment. (Source: Baker and Kimball, CEPR)
In fact, the official unemployment rate in 1968 was less than half of the rate today, and the actual employment figures were even better.
Productivity measures the wealth produced by an economy. One percenters want us to believe otherwise, but a system in which most new wealth goes to them is the exception, not the rule. Why are we deliberately preserving this harmful situation?
4. If the minimum wage had kept pace with the incomes of the top 1 percent, it would be more than $28 per hour today.
Minimum-wage workers to America’s wealthiest citizens: We’ll take it! (Source: Economic Policy Institute)
5. A single parent will still need federal assistance.
With a minimum wage of $10.10, a parent raising a single child will no longer qualify for food assistance. But a single parent with two children will still need the help, since a full-time minimum wage won’t lift them far enough above the poverty threshold.
A full-time worker earning $10.10 per hour makes $21,008 per year. The cutoff level for educational aid through the TRIO program is $23,595 for a household of two. The cutoff level for food assistance is $25,392 (annualized) for a three-person household. (Sources: Office of Postsecondary Education, USDA/SNAP)
6. Corporate profits are at or near record-high levels.
They’re so high, in fact, that management is reportedly getting nervous about it. A $10.10 minimum wage might not do enough to re-balance wages and profits, and thus to put their hearts at rest.
7. It’s what the public wants.
Two-thirds of voters want to see the minimum wage increased to at least $10.10, according to recent polling. Forty-three percent of them would like to see it raised even higher – and that’s without anybody making the case for that higher number.
Why not make that argument to the American people? We would be more likely to wind up with a minimum wage they’ll like even better.
8. A higher minimum wage will do even more to spur economic growth and widespread prosperity.
They’ll probably like their economy better, too. So much of our national income is flowing to the wealthiest among us that they literally don’t know what to do with it. Spending and investment have dropped among high earners, and more of their income is sitting idly in bank accounts.
Minimum-wage workers spend what they earn. That leads to increased economic growth – the kind that benefits all wage-earning employees.
9. All sorts of Republican presidents have signed bills increasing the minimum wage.
Eisenhower did. (Source: Miller Center, University of Virginia)
So did Richard Nixon, and George H. W. Bush, and George W. Bush. (Source: Bill Scher, The Week)
10. Newt Gingrich’s Congress raised the minimum wage, too.
In fact, Gingrich’s Republican Congress raised it by more than 21 percent back in 1996. So why can’t John Boehner’s Congress be pressed to do the same thing?
One difference: Democrats hammered the GOP relentlessly with procedural maneuvers, not unlike this reported move from Minority Leader Nancy Pelosi. Another difference: The AFL-CIO ran ads back in 1996 targeting Republicans for resisting a popular measure.
(Source: New York Times via Scher)
Why did these Republicans finally do the right thing? In many cases it was because the “Overton window” was facing in the right direction, thanks to some hard work and effective communication.
There’s a lesson in that: Make the case for what is right – and do it fearlessly, because it is right. When the time for expediency arrives, you may find that the limits of the possible have changed.