Democrats shouldn't raise the minimum wage

Posted by Joshua Holland at 2:45 PM on August 31, 2006.

As the New York Times reported this week, "wages and salaries now make up the lowest share of the nation's gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960's." I'm going to have a few posts about this during the next week.

Let's start with the minimum wage -- a hugely important measure for less educated workers.

There's been a lot of talk on the left about what Democrats should do if they win the House (although one Congressional staffer I spoke with was confident they'd manage to snatch defeat from the jaws of victory and said: "we're not measuring for new drapes yet"), and high up on that list is raising the minimum.

After all, it's remained the same --$5.15 and hour -- since 1997 and is now at its lowest point in terms of buying power since 1955. If you work full-time at the federal minimum (21 states have higher minimum wages), you earn $10,712 per year -- try lifting yourself up by those boot-straps.

But I worry that Dems will do just that: bring a bill to the floor with a one-time hike as Congress has done from time to time since 1938. Maybe they'll target a higher number than the Republicans' recent bill upping it to $6.25 (which was attached to all kinds of giveaways for the super-wealthy).

But that's not enough. If they bring a simple wage-hike to the floor and pass it, then next year the "wage floor" will have a lower value, and the year after that it'll be lower still and it'll keep losing value until another increase can be brought to a vote.

Common sense would dictate that they get past that process and index -- "peg" -- the minimum wage to some other measure that increases regularly. Economic logic says that should be inflation, keeping the value of the minimum constant.

But I think a better political move would be to pass a law that forbids Congress from raising its own pay until it's raised the floor for millions of working Americans and it can't raise its own pay by a greater percentage than it raises the minimu wage.

It's a perfect bit of populism: if you vote against such a measure you'll be branded a typical Washington Fat Cat more concerned with your own financial health than that of your constituents.

I went back and did some simple math. Congres has raised its own pay nine times since it last raised the minimum (the latest raise to go into effect on January 1). If a law pegging the lowest wages to Congressional salaries had been in effect for the last decade, the minimum would stand at $6.35 today. If it had been in effect since 1986, the lowest legal wage would be $7.29 and if it had been in effect since 1976 it would stand at $8.68 an hour.

The problem for the Dems is that such a measure would take the only well-like bit of populism that they have the courage to embrace off the political table. They want to have more minimum wage votes in the future in order to hold vulnerable Republicans' frequent 'no' votes against them on election day.

But while the minimum wage isn't sexy, it's hugely important for millions of low-level workers -- not just those who receive it, but those in the next income bracket and the one after that as well. It pushes up wages for the whole lower portion of the income spread. Hopefully, they'll put alleviating -- to a small degree, at least -- real people's pain over political expediency (I shan't hold my breath).

Coming soon: "living wage" ordinances are an energy-suck, and a bit of wonkyness as we look at possible solutions to levels of inequality not seen in this country since the Great Depression.

Joshua Holland is a staff writer at Alternet and a regular contributor to The Gadflyer.