Why Republicans Should Want to Index the Minimum Wage

If Republicans have any political sense at all, they’ll support not just raising the minimum wage, but indexing it.

The economic case for raising the wage, at a time when economic inequality is rampant, working-class incomes are declining, and Wal-Mart sales are falling through the floor, is overwhelming. But while Republicans may blow off the economic consequences of not raising the federal standard, they can’t be so cavalier in dismissing the political consequences.

The constituency that today’s GOP most desperately seeks to win, or at least neutralize, is Latinos—the ethnic group most clustered in low-wage jobs, and most certain to benefit from a minimum wage hike. In swing districts with substantial Latino populations, Democrats are certain to highlight Republican opposition to raising the wage in the 2014 elections.

Nor is support for a higher wage limited to Latinos. On each occasion in the past decade that a state minimum wage increase has been put before voters as a referendum or initiative, it has passed handily, including in red states like Arizona and purple states like Florida (where a ballot measure raising the wage garnered 72 percent support in 2004). Polling consistently shows large majorities favoring an increase in the federal minimum wage: Last year, a poll conducted by Celinda Lake found that 73 percent of likely voters favored raising it to $10 an hour and indexing it to inflation.

Given that the GOP is on the opposite side of public opinion every time that raising the minimum wage becomes an issue, its best way out of its self-created serial dilemma is to support creating a process that keeps the issue from coming up at all. The one way to do that is for the party to support indexing the wage to increases in the cost of living—in effect, making all subsequent wage hikes an automatic process based entirely on statistics. Just one GOP vote for a wage increase and indexing, and there will be no further need to take votes on that nasty minimum wage. For Republicans, indexing the wage inoculates them against any future damages that would otherwise arise from their Scrooge-like economics. Whether self-interest trumps that economic Scrooge-ism, however, remains to be seen.

 

Comments

It might cause such a small economic hiccup, as to be barely noticed, should we more than double the federal minimum wage over just one, single year -- say, in three quick jumps -- from $7.25/hr to $15/hr -- barely plausible ...

... 70 million workers (half the work force -- $15/hr being today's median wage) X average raise $8,000 (half the full $16,000) = a mere $560 billion increase in the cost of a GDP output of $15.6 trillion: yielding a piddling 3.6% direct inflation.

Imagine instead that starting from a higher minimum (say, $10.50/hr -- just to pick a number out of a hat), we had spread a raise to $15/hr over 45 years (say, from 1968 to 2013 -- just to pick some "arbitrary dates") -- and, that, to further dampen the "shock" of 2% direct increase over today's prices, that per capita income had very conveniently grown 100% in the meantime ...

... would anyone have barely noticed?

ANOTHER "KILLER" ARGUMENT ON DOUBLING THE MINIMUM WAGE -- I KEEP TRYING TO COME UP WITH ONE:
If there were a Teamster Union-tough retail employees union -- able to negotiate one contract with all employers (under a setup called sector-wide labor agreements) couldn't the bottom wage be raised to $15/hr -- simply because the market would bear it?

Wal-Mart employee wages would go up about 66% (these are all just rough estimates on my part) while Wal-Mart prices would only go up about 8%. McDonald's wages would double while a Big Mack went up 33%. Top 10 percentile wages would not go up and overall prices they pay would go up a tiny little bit -- is the latter what public policy should be concerned about?

In Chicago, CBS-TV News reports that 100,000 gang age minority youth are in street gangs * (mostly selling drugs) out of I estimate 200,000 the same age. Are minority males evil or do they just refuse to work for nothing (the super-low minimum wage having effectively out-sourced most such jobs to American-Mexico)?
* http://www.cbsnews.com/8301-18563_162-57451996/gang-wars-at-the-root-of-chicagos-high-murder-rate/

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