- Their arguments for boosting the minimum wage don't hold water.
The Democrat governors of Vermont and Connecticut have jumped up on the raise-the-minimum-wage bandwagon together with the governors of Massachussets and Rhode Island. Yesterday, they announced their plans to raise the minimum wage in their states to $10.10 an hour by 2017, and expressed their support for President Obama’s desire to do so for the entire country. They give three reasons for this, but they’re not particularly compelling.
1. The federal minimum wage, they claim, is lower when adjusted for inflation than it was in 1968. But is there any reason to believe that the minimum wage as set in 1968 was optimal in any sense? Remember that those were the days when price and wage controls were sweeping the nation, and even former Vice President Richard Cheney and former Secretary of Defense Donald Rumsfeld were busy implementing them. I would hope that we have learned something since then. What will the next argument be? Inflation is lower now than it was in the 1970s, so we should try to jack it up at least to where it was then?
2. Raising the minimum wage, they claim, is good for women, because women make up more than half of workers making earning the minimum wage. So far so good, but they then claim that “women account for roughly two-thirds of workers whose incomes would rise by increasing the minimum wage to $10.10 an hour. These women currently work 40 hours a week to make just $14,500 a year ... [and] are often the only breadwinners in their families.” In reality, of course, only about half of these women work full time, and on average, they earn only half of their family’s total income. The uncomfortable relationship the governors appear to have with the truth is disheartening.
3. That brings us to the third argument: “No American working 40 hours or more a week deserves to live in poverty.” A fair point. Of course, $14,500 is 26 percent above the poverty line for an individual. What if the individual has children? He or she will then receive $5,372 in Earned Income Tax Credit income, once again lifting her family out of poverty without even accounting for the broad variety of other anti-poverty programs available to families in this income range. Why the governors argue as if there is no safety net in this country is flabbergasting.
The sentiment that drives the governors’ proposal, however misguided it may be, is of course laudable. Many low-income families have endured immense struggles over the past decade, especially those that went through spells of unemployment or that are still unemployed. To help those most vulnerable workers, my colleague Michael Strain has proposed policies that are much better targeted and will not lead to massive job losses during what is still a weak recovery.
The four governors could, of course, just work on raising the minimum wage in their own states and stop complaining about House Republicans. Why would they not want to do that? Ah yes indeed – your own little laboratory of democracy is no fun when the subjects of your experiments can flee to places that will let them thrive.
Stan Veuger is a resident scholar at the American Enterprise Institute.