Raise The Minimum Wage

First, the disclaimers:

• I am not an economist.
• They don't call economics "the dismal science" for nothing!
• Ask the same question of 5 economists and you'll get 10 different answers.

Now then . . . President Obama and others are calling for an increase in the federal minimum wage from $7.25 to $10.10, to be phased in over three years.  They claim it would improve the lives of the working poor.

Conservatives are opposed, of course, and claim that a raise in the minimum wage would be a job-killer.  They always say that.  (And they find job-killers everywhere, don't they?  Benghazi?  Job-killer.)

The Congressional Budget Office has come out with its report which says it could do both.  The CBO's analysis found that higher minimum wage would raise 900,000 working adults above the official poverty level.  (That's "would," as in for sure.)  It also found that it could also result in the loss of perhaps 500,000 current jobs.  ("Could," as in maybe.)

Some thoughts and some numbers.

Poverty-level income for a family of four is $23,850.  That's gross income.  With typical withholding, it's a net income of $16,695, or $321 take-home per week for every-damn-thing for four people.  That's some mighty slim pickins.  I hope we can agree that any wage increase for these folks will be a clear and obvious benefit to them, and indirectly to our economy and society as a whole.

The minimum wage has been law for 76 years.  Under that law, the minimum wage has been raised 22 times.  If raising it will automatically result in catastrophic job loss, as the Republicans say it will, shouldn't we have seen 22 catastrophic job losses already?  Did I miss them?  Or is that the first 22 wage bumps were OK, but the 23rd will trigger the apocalypse?

If the suggested increase in the minimum wage will cause a loss of 500,000 jobs, shouldn't a similar wage decrease create 500,000 new jobs?  (This is the Michelle Bachmann economic theory, wherein she advocated eliminating the minimum wage altogether, claiming it would "end unemployment by creating hundreds of thousands of new jobs paying whatever.")

"Five hundred thousand jobs!" they scream.  The total American workforce is presently about 144 million people.  Around 78 million are hourly employees.  Roughly 2% of the hourly workers -- 1.57 million -- are paid the actual minimum wage right now.  But an increase in the minimum would also push up the wages of other current near-minimum workers.  Best guess is that approximately 10% of hourly workers -- 7.8 million or so -- would wind up getting a raise.  Still only 5% of the entire workforce.

I know a lot of business people.  I am one myself.  Ever-attentive to the bottom line, businesses always try to minimize all costs, including the pay rate and the number of employees.  They know how many workers it takes to "get the job done," whatever that job may be.  Whatever the wages, a rational business does not intentionally maintain a larger workforce than it requires.

But the CBO report seems to be saying that, at the moment, U.S. companies are paying minimum wage to half a million extraneous workers who aren't really necessary.  Yeah, we've been keeping them on the payroll out of the goodness of our hearts, but if the feds ever raise the minimum wage, all of a sudden 500,000 heads gotta roll.  Really?  It's possible, but that just seems business-irrational to me.

Finally, who are these minimum and near-minimum wage workers we're talking about here?  For the most part, it's not the zit-faced teenager's summer job.  That's a popular misconception.  The majority of these people flipping burgers, making beds and folding sweaters are adults just trying to support themselves and their families.  And $7-something an hour is a poverty wage.  We can do better than that, can't we?

Raise the minimum wage.  It's time.  The benefits outweigh the costs.