At a visceral level I agree with the position of the editors of the Washington Post on the minimum wage:
What the CBO’s report does, or should, remind lawmakers is that there is a trade-off in raising the minimum wage so substantially — and that, while the upside would accrue to society’s most vulnerable, so would the downside. Those who would lose out, in the form of no job at all, would wind up not with less pay but with no pay.
That fact alone argues for proceeding with caution. So, too, does the fact that most of the U.S. workforce already lives in a jurisdiction that has raised the minimum wage above the federal level, with the highest new minimums scheduled for states such as California and New York where wages and living costs are relatively high to begin with. If research from University of Massachusetts at Amherst economist Arindrajit Dube is correct, and the optimal minimum wage is 50 to 60 percent of a given regional labor market’s median hourly wage, then employment in Louisiana, where the median wage was $16.05 an hour in 2018, could be badly hurt by an increase to $15 between now and 2025. Puerto Rico, where a $15 minimum wage, if applied, would equal 150 percent of the current median wage, according to Bureau of Labor Statistics data, could be devastated.
The federal minimum wage is, indeed, overdue for an update, having lost about 18 percent of its real value since its last increase in 2009. The smart way to do that, however, is by pegging it to local conditions and then having it automatically grow with inflation going forward — no politics needed. The Third Way think tank has a plan that would set the national minimum wage at “one-half of the hourly wage for nonsupervisory workers†— that figure in 2019 would be $11.72 — and then allow local levels to vary above or below that depending on living costs. The Republican-controlled Senate probably will not act on the House measure. Another advantage of the Third Way proposal, therefore, is to show there is an alternative to that do-nothing approach, too.
but intellectually I agree even more with the need for reflection. What would the effect of a $11.72 minimum wage in Puerto Rico be? Louisiana? Seattle? New York City? My intuition tells me that it could well be devastating in the first two and have no effect whatever in the latter two.
The larger issue is what is the purpose of a national minimum wage? If it’s to ensure that people whose jobs are worth no more than the minimum wage can raise a family on their earnings, should that be the objective of policy? Or should the objective of policy be faster growth in the number of jobs worth paying more than the minimum wage? I think the latter.
Suggesting that we can do both is blithe. Politicians have tremendous difficulty walking and chewing gum at the same time. “Fight for $15!” sucks the air out of the room.
Said another way, it’s a way of changing the subject away from what we should really be talking about.
