What Democrats Don’t Get About the Minimum Wage

[theworldismine13]

What Democrats Don’t Get About the Minimum Wage
http://www.nytimes.com/2014/11/06/u...et-about-the-minimum-wage.html?abt=0002&abg=1

Democrats have greatly misunderstood the politics of the minimum wage in a way that hurt them in the 2014 elections.

They’re right about one big thing: Minimum wage increases are popular, at least to modest levels under $10, even in red states where Republican lawmakers have blocked them. Voters in four red states voted on minimum wage increases Tuesday and they all passed, three of them by wide margins. If what Democrats want is a higher minimum wage, they can keep putting the issue on ballots and most likely keep getting their wish.

What fights over the minimum wage did not do is deliver any advantage to Democratic candidates for office. Perhaps the best example of this comes from Illinois. The state has a Democratic governor and a Democratic-held legislature. If Democrats wanted to raise the minimum wage to $10 an hour from its current $8.25, they could have.

Instead, they put an advisory question on the ballot, asking voters for nonbinding guidance about whether the minimum wage should be $10. The idea was to fire up liberal voters by asking about popular Democratic positions; the ballot also included nonbinding questions about taxing millionaires to pay for education and requiring health plans to cover contraception.

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Activists canvassed a neighborhood in Little Rock, Ark., late last month to urge voters to support an increase to the minimum wage. Credit Stephen Thornton for The New York Times
All the nonbinding questions passed by wide margins. And the electorate that voted with liberals on the issue questions simultaneously rejected Gov. Pat Quinn, a Democrat, in favor of his Republican challenger, Bruce Rauner, who has mused about cutting the state’s minimum wage. (Mr. Rauner also opposes a millionaire’s tax.)

Here’s the thing about the minimum wage: Most voters don’t live in households where anyone earns it, or are even close enough to it to get a raise when it goes up. If you ask people whether they favor a higher minimum wage, most will say yes, and even vote that way on a binding referendum. But if a politician opposes raising it, middle-class voters won’t necessarily get angry, and their votes may not be moved.

The lesson of Tuesday’s minimum wage votes is that Democrats can do more on the minimum wage, not that they can help themselves politically by talking about it more. Just because a proposal is popular does not mean it can be a keystone in your economic agenda. As Kevin Drum of Mother Jones has noted, Democrats have an economic agenda that is heavily attuned to the poor; it’s much less clear what they would do for the middle class.

Many policies that help the poor are favored by the middle class. But if politicians want to win the votes of the middle class, they have to campaign on issues that affect them directly. Minimum wage increases do not serve that political end.

 

[newarkhiphop]

Good read, I will admit that I am obviously not an economist but I don't understand people who are against minimum wage raise just because.

Here is the argument I heard from two different female coworkers today after they raised it in our state

- " why do those people get a raise and we don't, we work hard"


- "what's the point of going to college if you can just complain every few years and get a big pay raise. If they keep raising everyone's earnings everything else is going to become expensive"

FYI, we make almost double per hour than what the minimum wage is going to be next year and we do the most non physically demanding job possible

 

[DEAD7]

They refuse to accept that the overwhelming majority of employees in this country(95%) are not paid minimum wage.

 

[Ian1362]

They refuse to accept that the overwhelming number of employees in this country(95%) are not paid minimum wage.

Minimum wage is a very populist piece of legislation without much economic impact. Part of that is because its an easy sell as a little-guy vs business sort of way to improve peoples lives, but I think that completely ignores the economic logic of it.

Fundamentally, wages are just the price of labor, and labor markets are one of many different types of markets (capital markets, commodity markets, etc). The minimum wage is just a constraint on labor prices, that says it is unlawful to enter labor contracts under X amount per hour; to that effect it is tantamount to compulsory unemployment. Also hurts black kids more than anything because of how horrible the job environment is in cities compared to burbs where white kids can get retail jobs left and right:

Minimum wage is especially harmful for minorities. According to a study of two labor economists, Professors William Even (Miami University of Ohio) and David Macpherson (Trinity University), each 10 percent increase in a federal or state minimum wage decreased employment of white males by 2.5 percent; for Hispanic males, the figure is 1.2 percent. But among black males in this group, each 10 percent increase in the minimum wage decreased employment by 6.5 percent. The effect is similar for hours worked: each 10 percent increase reduced hours worked by 3 percent among white males, 1.7 percent for Hispanic males, and by 6.6 percent for black males. The consequences of the minimum wage for the last subgroup were even more harmful than the consequences of the recession.[4]

People often raise the reducto ad absurdium, why not raise minimum wage to 200 dollars an hour? Because, most people respond, there isn't enough demand for positions at those wage rates, and business can't afford to price in that sort of massive increase in labor cost. The point being that even at a much lower, "living wage" type level, increasing minimum wage simply increases the price of labor certis paribus, it doesn't make your average food service employee work harder (I worked at minimum wage food/retail jobs for ~6 years before I got out of college). See the ppl out in Seattle losing their benefits, hours, and finding their positions cut with the $15 dollar wage.

If business out there are really just "exploiting workers" by suppressing their wages, and minimum wage stops them from doing that, why don't all jobs similarly attempt to do so? As you noted, 95% of people already make above minimum wage in the first place. Because, as I noted, labor pools are markets, much like many other, within which businesses compete with one another for employees possessing certain skills and talents. Lots of demand for STEM candidates and science-driven fields (look up those CDL oil jobs in Texas, make 70k a year driving a water truck at a shale site) but you have shytloads of kids trying to get psych, soc, and women studies degrees.

 

[Handsback]

Minimum wage is a very populist piece of legislation without much economic impact. Part of that is because its an easy sell as a little-guy vs business sort of way to improve peoples lives, but I think that completely ignores the economic logic of it.

Fundamentally, wages are just the price of labor, and labor markets are one of many different types of markets (capital markets, commodity markets, etc). The minimum wage is just a constraint on labor prices, that says it is unlawful to enter labor contracts under X amount per hour; to that effect it is tantamount to compulsory unemployment. Also hurts black kids more than anything because of how horrible the job environment is in cities compared to burbs where white kids can get retail jobs left and right:



People often raise the reducto ad absurdium, why not raise minimum wage to 200 dollars an hour? Because, most people respond, there isn't enough demand for positions at those wage rates, and business can't afford to price in that sort of massive increase in labor cost. The point being that even at a much lower, "living wage" type level, increasing minimum wage simply increases the price of labor certis paribus, it doesn't make your average food service employee work harder (I worked at minimum wage food/retail jobs for ~6 years before I got out of college). See the ppl out in Seattle losing their benefits, hours, and finding their positions cut with the $15 dollar wage.

If business out there are really just "exploiting workers" by suppressing their wages, and minimum wage stops them from doing that, why don't all jobs similarly attempt to do so? As you noted, 95% of people already make above minimum wage in the first place. Because, as I noted, labor pools are markets, much like many other, within which businesses compete with one another for employees possessing certain skills and talents. Lots of demand for STEM candidates and science-driven fields (look up those CDL oil jobs in Texas, make 70k a year driving a water truck at a shale site) but you have shytloads of kids trying to get psych, soc, and women studies degrees.

I haven't seen any evidence that Seattle has an increasing unemployment rate. Link?