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December 01, 2013 4:00 PM Coming soon: a $12 (or more) minimum wage?

By Kathleen Geier

With Republicans in firm control of the House of Representatives, there doesn’t seem to be much hope for any kind of a progressive agenda getting through Congress these days. But one area where there does seem to be movement is the minimum wage. Currently, there is a bill making its way through Congress to increase the federal minimum wage — which at present is stuck at $7.25 — to $10.10 an hour and index it to inflation. I can’t see that getting sufficient Republican support to pass in the House. But the good news is that there’s been a flurry of activity to increase the minimum wage at the state and local level. Progressives have been achieving some exciting victories. Consider:

— This past week, two DC-area counties in Maryland — Montgomery and Prince George’s — voted to increase the minimum wage to $11.50 an hour. A similar vote in DC proper is set for this week, part of a coordinated effort between officials in all three counties.

— Also this past week, officials in SeaTac, Washington finally finished counting the ballots for a local minimum wage initiative, and the news is good. Some 6,000 hotel and airport workers are poised to receive what is by far the highest minimum wage in the nation — $15 an hour. (The initiative squeaked by in the final vote count but could be reversed subject to a recount).

— Earlier this year, California Governor Jerry Brown signed legislation increasing the state’s minimum wage to $10 an hour. In addition, conservative millionaire Ron Unz, of all people, is bankrolling a ballot initiative to increase the minimum wage even higher — to $12 an hour by 2016. Minimum wage increases generally poll very well, especially in California, which suggests such an initiative may well pass.

— Last month voters in New Jersey approved an amendment to the state’s constitution raising the minimum wage to $8.25 an hour and tying future minimum wage increases to the cost of living. These were the same voters, by the way, who re-elected Governor Christie in a landslide.

— Finally, additional campaigns to raise the minimum wage are active in a number of other states and localities.

All of this is heartening and inspiring. The minimum wage is an issue that really seems to resonate with people. The idea that, in the richest country in the world, many full-time workers make so little money that they live in poverty is outrageous. That Walmart pays its workers starvation-level wages — and then collects food donations for them so that they may “enjoy Thanksgiving dinner” — is an obscenity. People get that, and they want to do what they can to help. It’s a matter of basic fairness.

Besides the moral issue, there’s the wonkier, policy side of it. In yesterday’s New York Times, economist Arindrajit Dube published a very fine piece that looks at the economics of the minimum wage. For many years, economists, mislead by distorted textbooks models, believed that the minimum wage caused significant unemployment. But as Dube explains, rigorous empirical studies performed over the past two decades have demonstrated that this is not the case.

Dube also makes a couple of points that I don’t think get nearly enough attention in debates about the minimum wage. For one thing, he debunks the notion that low-wage workers are teenagers working for non-essential spending money. On the contrary, low-wage workers as a group increasingly tend to be older and better educated than in the past:

In 1979, among low-wage workers earning no more than $10 an hour (adjusted for inflation), 26 percent were teenagers between 16 and 19, and 25 percent had at least some college experience. By 2011, the teenage composition had fallen to 12 percent, while over 43 percent of low-wage workers had spent at least some time in college. Even among those earning no more than the federal minimum wage of $7.25 in 2011, less than a quarter were teenagers.

Dube also notes that compared to other countries, America’s minimum wage is extremely low:

International comparisons also show how out of line our current policy is: the United States has the third lowest minimum wage relative to the median of all Organization for Economic Cooperation and Development countries.

Finally, he points out that the erosion of the minimum wage has been an important factor in rising economic inequality, especially for women workers:

This erosion of the minimum wage has been an important contributor to wage inequality, especially for women. While there is some disagreement about exact magnitudes, the evidence suggests that around half of the increase in inequality in the bottom half of the wage distribution since 1979 was a result of falling real minimum wages. And unlike inequality that stems from factors like technological change, this growth in inequality was clearly avoidable. All we had to do to prevent it was index the minimum wage to the cost of living.

There’s a lot more great stuff in his piece — give it a read. The main point he makes is an excellent one: for a good chunk of the twentieth century, a wide range of institution and policy mechanisms, most importantly unions, were available to protect the economic interests of working people. Most of those tools either no longer exist, or are far more difficult to implement. For that reason, the minimum wage has become increasingly important as weapon in the fight against against poverty and inequality. It’s good to see that some of our local elected officials are making use of it — even if our dysfunctional Congress is unable to do so, for now.

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee

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