Minimum Wage Increase is Necessary in 2013


Governor Mark Dayton of Minnesota said Wednesday that the state’s minimum wage should grow from $6.15/hour to between $9 to $9.50/hour, joining other states in a movement President Obama begun during his latest State of the Union speech.

This naturally has many Republicans in an uproar. They declare that raising the minimum wage will increase the cost of goods and services and would scuttle an already anemic economic recovery by forcing business owners to fire employees. The economy would tank and America’s position in the world would decay even further.  

This is yet another example of Republicans relying on theoretical and ideological models rather than hard facts. There is no evidence that the increased cost of goods or services would negate the impact higher paychecks or hurt the competitiveness of American companies to compete globally.

The GOP says "It's blindly obvious if you use logic!"

But economic models are just that, models, and the logic they use cannot properly describe reality as it is. Republicans used to mock Democrats for this sort of thing.

Must Republicans be constantly reminded of Henry Ford’s decision to double his employees’ wages nearly 100 years ago? He was no friend of labor, yet he recognized that unless the average man could earn more than his daily bread there would be no mass demand for his products. What use was it to be a genius inventor if no one could buy the invention?

Ford increased his workers’ wages and America’s standard of living, and eventually the shape of the entire economy, were transformed. The same could be done today when rising corporate profits vastly exceed rising employment.    

Moreover, what damage could a higher minimum wage do to the competitiveness of American firms? Most minimum wage workers serve in the retail, childcare, or the health care industry industries that rely on person-to-person interaction with customers. They cannot be exported under any circumstances, and no domestic firm will be disadvantaged against another if they all need to pay the same wage.

The impact of higher wages on our international competitiveness is also exaggerated.  Why? Because labor costs are growing everywhere. The millions of rural migrants China relied on to keep costs down by working in terrible sweatshops have come and gone, and wages have grown 20% every year since 2005 as a result. Combined with other global trends like higher energy costs and there are more incentives to manufacture products in America than have existed in years. Raising the minimum wage floor will not undermine this.

What about immigration, some might say. Wouldn't a higher minimum wage increase illegal immigration and further unsettle civil society? Perhaps. Yet let us remember that the Pew Hispanic Center reported last year that immigration from Mexico had not only ceased, but in fact reversed. With the 2008 recession eliminating jobs in the U.S., growing standards of living in Mexico, and increased border security efforts, the fact is that they are not coming back. America's own source of cheap labor has vanished too.  We might need a higher minimum wage just to attract people to the country in the first place to fill the jobs natives don't want.

The last Presidential election was noteworthy for the extent to which Republicans abandoned the working man and woman for big business and profligate donors. It is high time that they acknowledge the reality of everyday experience and the contribution of workers to our service- and knowledge-based economy. They ought to join with Democrats in providing them with a wage they can live on.