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Tilting at Windmills

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December 15, 2009

LEAVE THE MINIMUM WAGE ALONE.... In these difficult economic times, there's nothing wrong with some outside-the-box thinking. But it seems the Conservative Idea of the Week is to improve the economy but slashing the minimum wage. And there's something definitely wrong with that.

The Washington Post's Charles Lane recommended a minimum-wage cut in an op-ed yesterday. Fox News quickly embraced the idea.

Pat Garofalo sets the record straight.

[N]one of the anchors mentions that almost all of the economic research on the subject shows that the minimum wage has little to no effect on employment. The most well-known researchers on the subject -- David Card and Alan Krueger -- examined a minimum wage increase in New Jersey, and found that "employment actually expanded in New Jersey relative to Pennsylvania, where the minimum wage was constant." [...]

[I]f the minimum wage were decreased, how many employers would simply cut the wages of their current workers, at a time when consumer demand is already low? There are plenty of job creation ideas being bounced around these days, but you can count on Fox News to seize on one that would mean less money and a lower standard of living for workers.

As far as I can tell, congressional Republicans have not yet embraced the idea -- given that the minimum wage tends to be pretty popular, the GOP would have to tread carefully -- but it's something to keep an eye on. Indeed, if anyone sees GOP lawmakers call for cutting the minimum wage, let me know.

Steve Benen 3:10 PM Permalink | Trackbacks | Comments (34)

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Slash the wages of the top 100 people in the firms by 25%.

I bet that would give them much more cash to hire more.

Posted by: mike from Arlington on December 15, 2009 at 3:09 PM | PERMALINK

This talking point has been around a while already, though though I haven't heard it brought up by any lawmakers yet. A RW friend of mine raised this as a way to stimulate the economy back in August or September. I'm sure he heard it on Limbaugh or Beck, since that's where all his talking points come from. I did write him a polite email detailing much of what you've posted here, including links and sources. I never got a reply, and he hasn't talked politics around me since.

Posted by: kris on December 15, 2009 at 3:16 PM | PERMALINK

In Illinois, a number of GOP candidates for Governor are calling for cutting the minimum wage. Here in Illinois the min wage is $8, higher than the federal level of $7.25.

I'm sure it will spill over into Mark Kirk's comments as he runs for Senate.

Posted by: Gridlock on December 15, 2009 at 3:17 PM | PERMALINK

How perfect for Corporate America to create even more of an 'indentured' society. All the wealth in less that one percent of your citizens hands, and all the rest of you slave away an indentured citizens to these Corporations. Your evil commitment to capitalism and CORPORATE AMERICA versus the common good of your citizens equals the STENCH of your country that is a disgrace to this planet.

Posted by: blue on December 15, 2009 at 3:18 PM | PERMALINK

Higher hourly wages grow the economy--not the other way around.

More money in the pockets of the working poor means more money injected directly into the economy (i.e., "Marginal Propensity to Consume" and the "Spending Multiplier"). As a result, we all benefit from higher minimum wages.

Posted by: Chris on December 15, 2009 at 3:21 PM | PERMALINK

Three words: Maximum Wage Law. OK, it'd be all but impossible to implement- would you tax everything over, say, 1000% of the mean at 100%?- but it does have a certain populist appeal to it.

Cutting the maximum wage is likely to have less of deleterious impact on the economy than cutting the minimum wage would.

Just a modest proposal, if you would,

Posted by: Zorro on December 15, 2009 at 3:27 PM | PERMALINK

And that's without considering that the rules of economics change when interest rates are at the zero bound. Krugman:

what Keynes had to say then is as valid as ever: under depression-type conditions, with short-term interest rates near zero, there’s no reason to think that lower wages for all workers — as opposed to lower wages for a particular group of workers — would lead to higher employment.
Posted by: low-tech cyclist on December 15, 2009 at 3:28 PM | PERMALINK

Once wages go lower than the current minimum, the workers end up qualifying for food stamps and other social problems just to stay alive, meaning those jobs become indirectly subsidized by the government.

Posted by: comstock load on December 15, 2009 at 3:29 PM | PERMALINK

What Gridlock said. When the chips are down, the GOPers want to institute a pay cut for poor people. Is there any better example of why they should never be allowed within a 100 miles of elective office?

Posted by: leo on December 15, 2009 at 3:30 PM | PERMALINK

We feel that American's make too much money. If only there was a way to siphon off most of the middle class's wealth and give it to the captain's of industry, we'd be good again. Just like 2000-2008.

We propose 10 planks for our Return the Country to Prosperity Platform© :

1.Tax cuts on capital gains
2.Tax cuts on income above $250,000
3.Deregulation of financial markets
4.Deregulation of onerous environmental laws
5.Abolishment of minimum wage laws
6.Abolishment of 40 hour work week laws
7.Abolishment of child labor laws
8.Tax holidays for healthcare insurers
9.Bailouts for bankers
10.fill in the blank with your own wealth siphon

Posted by: Your Friendly GOP on December 15, 2009 at 3:31 PM | PERMALINK

That figures and just in time for Christ-mas.

While they're at it, maybe they should roll back the child labor laws so corporations could get some of that cheap child labor. With the money we save not educating kids and funding the Dept. of Ed. we could give more tax breaks to stimulate economic growth.

Maybe we could lower pay and benifits for soldiers and their families. Then we could afford more state of the art weapons systems.

Posted by: Winkandanod on December 15, 2009 at 3:33 PM | PERMALINK

Here we go. Republicans will push for a minimum wage cut in the upcoming jobs bill. Progressives will say no, then "centrist" Dems (and Lieberman) will demand inclusion of the pay cut. Then progressives will get steamrolled into passing a jobs bill, any jobs bill, with minimum wage cut intact.

Posted by: Steve Simitzis on December 15, 2009 at 3:34 PM | PERMALINK

Here's a job creation idea.

Let's burn down homes in rich Republican neighborhoods and wait for the insurance companies to pay to have the homes rebuilt.

Rich communities might even hire a few extra cops along the way.

Immoral? But it will create jobs.

Posted by: Fuck the Rich on December 15, 2009 at 3:36 PM | PERMALINK

Say a minimal-wage earner works 40 hours a week and works 50 weeks a year. If their payroll deuctions are 15% they only have 33 dollars a day.

You can spend that amount just buying a few drinks and a simple dinner.

Folks have no idea what poverty is, unless it's "your" reality.

Blaming the workers for this mess is cowardly and downright pathetic.

Posted by: Tom Nicholson on December 15, 2009 at 3:42 PM | PERMALINK

Where does the idea come from, apart from shortsightedness or pure hatefulness, that keeping ordinary working people poor is good public policy? Especially in an economy that depends as much on consumer spending as ours does, that doesn't make great sense. Of course, the people arguing for reduction of the minimum wage claim that it would stimulate employment. But even if that were true, low-wage workers don't have much left over from rent and food costs to purchase anything else.

Making people's lives as miserable and constrained as possible doesn't sound like a good business plan, to say nothing of other considerations.

Posted by: tamiasmin on December 15, 2009 at 3:42 PM | PERMALINK

If only the Democrats were competent. Imagine every Democrat saying, at every opportunity, "The Republicans think you make too much money and they want wages to go down".

Posted by: Joe Buck on December 15, 2009 at 3:44 PM | PERMALINK

This is so typical of people whose exposure to economics ended with Intro to Micro. They believe in a very simple model of downward sloping demand curves and upward sloping supply curves and a single equilibrium. They are constitutionally incapable of seeing beyond this simplistic model.

One of the things completely missing in this discussion is the effect on wages that a decrease in the minimum wage would have. Changes in min wage affect not only that wage, but the layers of wages above it. Any decrease in the minimum would exert downward force on those wages, meaning that those in the strata closest to the minimum wage would also see their wages cut. Now tell me how we're supposed to grow our economy while the people with the greatest MPC would see lower wages!

Posted by: Justin_Anderson on December 15, 2009 at 3:49 PM | PERMALINK

Here's an idea equally "out-of-the-box":

Confiscate the wealth of the richest 2,000 citizens of this country and imprison them and their families for life -- at some resort somewhere, Las Vegas sounds perfect...

Use that money as seed money to lend to small businesses (since the Banksters aren't doing it) to help them innovate and hire new employees.

Set up living wage mandatory income levels -- with gov't supplements with the balance of the "nationalized wealth" -- in the 2000 largest cities in the country as a start towards guaranteed employment as a human right in this country...

That would be a good start.

oh, and if Chas Lane isn't a member of one of the top 2000 families, why, we could make an exception of him...(or would that be too Liebermanly of me?)

Posted by: neill on December 15, 2009 at 3:49 PM | PERMALINK

We get frustrated over Democratic incompetence, but talking about lowering the minimum wage is massive GOP fail. Right wing blowhards: please, please pick this up as an issue.

Republican overreach is always their undoing.

Posted by: danimal on December 15, 2009 at 3:53 PM | PERMALINK

Republican overreach is always their undoing.

It hasn't undone them yet...


Posted by: Zorro on December 15, 2009 at 3:59 PM | PERMALINK

Certainly a cut in the minimum wage alone would be unfair. But this could be offset by cutting taxes for the rich.

Now can I be a conservative pundit?

Posted by: hells littlest angel on December 15, 2009 at 4:06 PM | PERMALINK

Up is down, poor people are a burden, tax revenue isn't needed for government programs and services, tax cuts for the wealthy fuel the economy. The only reward for this ignorance is death, may it quickly find the liars and the gready.

Posted by: Trollopy Passion on December 15, 2009 at 4:06 PM | PERMALINK

And the greedy!

Posted by: Trolopp on December 15, 2009 at 4:08 PM | PERMALINK

Yes and while they're at it issue MORE H-1b visas to do 'the work Americans don't want to do'...here is a writer in the comments of another blog...

There are now over 2.2 million foreigners on H-1B taking jobs in the US. There are over 2.2 million unemployed American programmers and engineers.

Since H-1B started about 10 years ago wages for American programmers have been stagnant. Still Indians will enter the US for jobs because wages in India are much worse. So they will take the jobs at stagnant wages but Americans are forced out of these jobs.

Posted by: SYSPROG on December 15, 2009 at 4:10 PM | PERMALINK

Someone should challenge Charles Lane and the Fox News assholes to live on whatever minimum wage they propose before they bark about what a great idea it would be.

Posted by: Michael on December 15, 2009 at 4:31 PM | PERMALINK

The FOXNEWS crew works this way when it comes to offering the American people sane views of current events - no step forward, and more than a dozen backward! -Kevo

Posted by: kevo on December 15, 2009 at 4:36 PM | PERMALINK

[IP noted. Say something like that again, and you won't comment here anymore. --Moderator]

Posted by: anonymous on December 15, 2009 at 5:14 PM | PERMALINK

Out of freaking bounds, anonymous.

Posted by: shortstop on December 15, 2009 at 5:53 PM | PERMALINK

Z--Dems have the White House and both houses of Congress. They don't really know what to do with them all the time, but that's another issue. The Republicans undoing over the past two election cycles has been pretty stunning.

Posted by: danimal on December 15, 2009 at 5:54 PM | PERMALINK

Wages in a capitalistic system are set by supply and demand, not what anyone thinks anyone else deserves. THEORETICALLY, an increase in wages by law (minimum wage) will result over time in less jobs for those affected. Just imagine if the lowest wage in the US was a dollar an hour. All those manufacturing jobs would not have moved to China. But there are of course many more factors involved in reality. A lot of jobs can't be outsourced. If janitors or motel maids cost a lot, maybe it will pay to buy a wider vacuum cleaner and an electric floor scrubber to reduce labor time, but the job still has to be done. And those workers actually spend their money to buy goods and services. Besides any theory, even with those jobs moving away and creating huge problems in certain areas, the overall effect on employment before the recent debacle was nill. The effect on society without a minimum wage (or maybe just as bad, without health care for everyone), having lots of indigent working people knowing about lots of rich guys making a thousand times what they are...can't be good. Ever since we decided that all men are created equal and endowed by their Creator with certain unalienable rights, that among those are life, liberty and the pursuit of happiness....odd that Euopeans have taken these ideas way more to heart than we have.
A shopping mall in an armory in the Bronx was just torpedoed because people wanted approval based on employees there getting a living (not minimum) wage. In NYC, $10 an hour plus benefits. Mayor Bloomberg said it isn't the business of government to be setting wages. Ooops, Mr. Independent turns out to be a right wing reactionary Republican after all.

Posted by: emjayay on December 15, 2009 at 6:22 PM | PERMALINK

Making people's lives as miserable and constrained as possible doesn't sound like a good business plan, to say nothing of other considerations.

We're not "making" people's lives anything. Poor people are poor for a reason. No get up and go in them.

Posted by: Myke K on December 15, 2009 at 8:24 PM | PERMALINK

There's no excuse for not tying the MW to the CPI, like Social Security payments and the like. Then we don't have to keep fighting over changing it by statute.

Also, it is hard to directly pose a maximum-wage law, but it is totally possible and worthwhile to limit deductibility as labor expense, for income over some value as has been proposed, and then wimped out on (AIG revolting about the 500k cap.)

Posted by: neil b on December 15, 2009 at 9:03 PM | PERMALINK

If anything, an INCREASE in the minimum wage would increase consumer spending to stimulate the economy. Guaranteed.

Another typical case of GOP backasswards thinking. They just don't get it.

Posted by: bdop4 on December 16, 2009 at 8:32 AM | PERMALINK

That is understandable that money makes people free. But what to do if one has no money? The one way only is to get the loans and credit loan.

Posted by: MaxwellMelanie on June 22, 2010 at 6:18 AM | PERMALINK
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