Raising the Minimum Wage and the Forces Opposed to It
If anyone needs a break from the typical fare we're treated to on the bobblehead shows on Sundays, check out some of Chris Hayes' show from this Saturday. It's rare that this kind of in depth and comprehensive discussion happens, even rarer where the discussion is so good, it's worth highlighting multiple segments. But that's exactly the case with this discussion of President Obama's proposal to raise the minimum wage made during his state of the union address, that is already being clouded by the fog of talking points in DC:
Then we’ll dive deep on the president’s proposal to raise the federal minimum wage from $7.25 $9 an hour, and to index the minimum wage according to inflation, so that it keeps pace with the cost of living. Republicans and business groups have lined up in opposition to a minimum wage increase, and in doing so, they’ve repeated a talking point that has been common in Washington for decades: that an increase in the minimum wage would lead to reductions in employment. As it turns out, there’s a growing body of empirical evidence that indicates that minimum wage increases, within a certain range, have no negative impact on employment, and may actually boost worker productivity and consumer demand, providing a much-needed stimulus to the economy.
For the most part, Hayes' guests were outstanding and really informative to listen to, with the exception of the Hispanic Leadership Network's Jennifer Sevilla Korn. She may be the kinder, gentler face of the Republican Party with toned down rhetoric with respect to the immigration issue, but on Hayes' show, she was nothing but a right wing talking points regurgitation machine with little to no facts to back up her assertions.
If you listen to her carefully during her time on the show, she was challenged by Hayes quite a few times to give specifics for her claims about minimum wage supposedly causing businesses not to hire or that it might cause inflation. How often does that happen? And just like a typical conservative, she never answers him. The same can't be said for the others on the panel who were more than willing to talk about specifics and shoot holes straight through her talking points.
In the segment above, Lew Prince, owner of Vintage Vinyl, Inc. a small business in St. Louis, Missouri, talked about his invitation to come to the White House with a number of other small business owners and they were asked by President Obama "What can I do for you?" Prince recounted that the first thing they all said in unison was to raise the minimum wage to $10 per hour, because "putting three hundred bucks a month in the hands of the customers is the best economic stimulus the country can have and that money tends to get spent in the businesses more than any other."
Unlike Korn, Prince's point is backed up by research.
A 2011 study by the Chicago Federal Reserve Bank finds that minimum wage increases raise incomes and increase consumer spending, especially triggering car purchases. The authors examine 23 years of household spending data and find that for every dollar increase for a minimum wage worker results in $2,800 in new consumer spending by his or her household over the following year.
A 2009 study by the Economic Policy Institute estimates that Obama’s campaign pledge to raise the minimum wage to $9.50 by 2011 would inject $60 billion in additional spending into the economy.
The National Employment Law Project's Tsedeye Gebreselassie followed up by discussing the fact that 74 percent of the public supports raising the minimum wage. Unlike the conservatives speaking out against it, they understand that that one cannot live on the current wage and that the minimum wage has not kept pace with inflation. They know the opposition is with the lawmakers supporting the top wage earners only.
Korn cites some unspecified economist-- who of course isn't a partisan--telling her that raising minimum wage is going to cause inflation. While that might be true if it is raised too high or if the economy was in a period of stagflation, that's not the political environment we have now and Prince countered her argument quite nicely.
PRINCE: You won't get a business owner that says that and I'll tell you what, the portion of wages, that is in my cost, is actually relatively small and even in the manufacturing and a whole lot of areas. It is relatively small. My overhead is complicated and large, and the minimum wage and the wage, is actually a small part of it. And prices in America, this is, you know, the great secret – prices in America are not set by the cost of making something or doing something. Prices are set by what market research tells most companies you are willing to pay. You know, the reason a beer is ten bucks at Yankee stadium isn't because...
HAYES: Of course not.
PRINCE: … you can get it there to the bar across the street where it is two bucks.
In the next segment the panel discussed the two different arguments we're seeing from Republicans on why they're against raising the minimum wage. One being the that it will cause a negative effect on employment and the other being that it will cause price spikes that the system cannot absorb.
During that segment, Hayes and his panel discussed which items' costs might go up and whether inflation will kick in if the minimum wage is increased and Marco Rubio's rebuttal to the State of the Union on the topic and just who absorbs the cost of raising the minimum wage.
Hayes asked panel member Arindrajit Dube, assistant professor of economics at University of Massachusetts-Amherst, to respond to the assertion that if you tie the minimum wage to inflation you're going to create a "horrible wage price spiral."
DUBE: The problem with that argument is that there's just so few workers that are making minimum wage that the idea that at 24 percent increase in minimum wage would actually affect the overall inflation rate – there is no economist who would argue that. It may affect the prices of a burger...
HAYES: Right, but the cost would be passed on.
DUBE: ...maybe it will increase a price of a burger by up to 1 percent if you increase, a 25 percent increase of the minimum wage. Okay, so part of that is, you know, how do consumers actually react to that. Do they react poorly and they stop buying burgers for one more cent or do they actually absorb that cost?
I think the reality is that a lot of it gets absorbed pretty easily. So the idea that it is going to create a wage spike and wage price spiral, while you are increasing the wage for, you know, 7 percent of the work force, is just, really, it doesn't makes sense.
Tsedeye Gebreselassie followed up by discussing the reasons the minimum wage was enacted in the first place, such as the need to "eliminate substandard conditions and to make sure work corps survive and make sure businesses that paid their workers a living wage weren't being undercut by unscrupulous employers paying their workers virtually nothing." As she noted, Congress was responding to the labor market of the early 19th century and the sweatshops that existed here in the United States. She took apart Sen. Rubio's argument that somehow raising the minimum wage hasn't worked.
GEBRESELASSIE: The purpose of a minimum wage law is to guard against these horrific labor conditions and it has succeeded. I mean, if Senator Rubio is saying that the minimum wage law isn't working because people are still living in poverty, well yes, that's the whole point of raising the minimum wage.
They finished up this segment with a discussion on whether we should be indexing the minimum wage to inflation, so we're not messing around and waiting every five or ten years to have these battles. Unfortunately, it's a sad fact that Democrats haven't wanted to do just that because they like having this political battle with Republicans because the issue is so damaging to the GOP. They want to have more chances to vote on it, irrespective of how it impacts those actually earning minimum wage. I would be more than happy to see that come to an end if it meant those living on the fringes were allowed to earn a living wage instead of being used as a political football by either side.
I wanted to include the following segment as well, because this was the segment where all of Korn's talking points really had huge holes blown in them and where the other guests on the show pointed out the fact that it's not small businesses who are paying these low wages, it's the large businesses like the Wal-Marts of the world who are the ones driving the wages down and exerting the political pressure.
And as Prince pointed out, he and the rest of us are being forced to subsidize these businesses through our tax dollars and paying to subsidize their health care because they're earning below poverty-level wages. They also discussed the sad fact that those making just above minimum wage often don't realize that their wages will be pushed up as well and are some of the most likely to be against raising the minimum wage due to something a study called "last-place aversion."
It's sad but not surprising. Here's the final segment where Korn did her best to make sure she wasn't held accountable for the Republicans' policies and to play the bait and switch game with attempting to completely change the subject when anyone tried to pin her down on anything when it comes to the minimum wage issue. I really hope Hayes doesn't have her on again. She contributed next to nothing of value to the conversation here.