Raising the minimum wage from $7.25 to $9 should be a no-brainer. Republicans say it will cause employers to shed jobs, but that’s baloney. Employers won’t outsource the jobs abroad or substitute machines for them because jobs at this low level of pay are all in the local personal-service sector (retail, restaurant, hotel, and so on), where employers pass on any small wage hikes to customers as pennies more on their bills. States that have a minimum wage closer to $9 than the current federal minimum don’t have higher rates of unemployment than do states still at the federal minimum.
Barack Obama’s State of the Union address last week—which called for, among other things, universal pre-K and raising the minimum wage—offered a bold program for rebuilding the middle class. But the president’s continuing commitment to budgetary austerity makes these commitments hollow, if not cynical. And just as Obama and the Democrats paid the price in the 2010 midterm election for excess caution and conciliation, the results of tokenism are not likely to be pretty in the midterms of 2014.
In his 2013 State of the Union, President Obama proposed a $9 federal minimum wage, indexed to inflation. Here to discuss the minimum wage as a policy is Arindrajit Dube.
Dube is a professor of economics at the University of Massachusetts Amherst and a widely respected scholar of labor markets and the minimum wage. Along with T. William Lester and Michael Reich, he is the author of Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties (2010), a major study that found no adverse employment effects of minimum wages increases by studying counties that cross state lines.
Speaking about the U.S.-Mexico border in San Diego, California on Monday, Secretary of Homeland Security Janet Napolitano assured the audience that "the border is secure ... I believe it is a safe border," an assessment she reprised yesterday in a Senate hearing on immigration reform. "I often hear the argument that before reform can move forward we must first secure our borders, but too often the ‘border security first’ refrain simply serves as an excuse for failing to address the underlying problems," Napolitano said. "Our borders have, in fact, never been stronger."
President Obama did not say last night that “the state of the Union is strong” a favorite phrase used in past State of the Union speeches. Instead he said, “The state of the Union is stronger.” That phrase points away from “the rubble of crisis” and toward a brighter future. In that respect, the address shared much in common with the president’s Inaugural, which presented a broad, liberal vision for Barack Obama’s second term and set policy goals for years down the road. In his address to the join session of Congress, the president was able last night to lay out more specific proposals than he could in his Inaugural speech.
In something that shouldn’t come as a surprise, at all Republicans have already announced their opposition to a minimum-wage hike. Here’s House Speaker John Boehner, throwing cold water on the proposal:
“I’ve been dealing with the minimum wage issue for the last 28 years that I’ve been in elected office,” Boehner told reporters at a press conference, arguing that raising the minimum wage would hurt people trying to climb the “ladders of opportunity” that Obama mentioned in his speech.
Besides universal preschool, the most overtly progressive policy proposed by President Obama last night was a large minimum-wage hike, from the current rate of $7.25 per hour—instituted in 2009—to a new rate of $9 per hour. Not only is this higher than the minimum wage in every state other than Washington, but when adjusted for inflation, it’s the highest minimum wage since 1981.
Senate minority leader Mitch McConnell says Senate Republicans will unanimously support a balanced-budget amendment, to be unveiled Wednesday as the core of the GOP’s fiscal agenda.
There’s no chance of passage so why are Republicans pushing it now? “Just because something may not pass doesn’t mean that the American people don’t expect us to stand up and be counted for the things that we believe in,” says McConnnell.
By any measure, President Obama’s first term was consequential. In four years, he signed an $800 billion stimulus and infrastructure investment program, laid the foundation for universal health insurance, secured new regulations on the financial sector, repealed Don’t Ask Don’t Tell, and put the United States on the path back to economic recovery.
Photo of Bay Bridge construction courtesy of Caltrans
Word is that in tomorrow's State of the Union address, Barack Obama is going to propose some new infrastructure spending as a way of not only boosting the economy in the short term by creating jobs in areas like construction, steel, concrete, those little plastic anchors you put around screws when you're putting them in brick, and so on, but also as an investment that pays long-term dividends in the form of bridges that work and sewer pipes that don't burst. As Neil Irwin points out, given the large number of construction workers sitting idle and the incredible fact that the U.S. can now borrow money at negative interest—something that won't be true forever—it would be crazy for us not to take advantage of this moment and start doing some long-overdue repairs. "One can easily imagine a deal," Irwin writes. "Democrats get their new infrastructure spending, and Republicans insist on a structure that requires private sector lenders to be co-investors in any projects, deploying money based on its potential return rather than where the political winds are tilting." I'm with Kevin Drum on this: Why on earth would we expect Republicans to go along?
Italian media mogul and former ex-Premier Silvio Berlusconi during a television appearance last week. The latest political polls suggest he is gaining ground on center-left candidate Pier Luigi Bersani ahead of Italy's elections.
The unemployment rate is a decent measure of where the economy stands, but it doesn’t provide a full picture of joblessness—it only measures the employment status of people looking for a job. For a broader sense of unemployment—and its affect on everyday life—you have to dig deeper. A recent study from Rutgers University, for example, provides a sobering look at the broad impact of persistent joblessness.
Can we just keep things in perspective? On Tuesday, the President asked Republicans to join him in finding more spending cuts and revenues before the next fiscal cliff whacks the economy at the end of the month.
Yet that same day, the Congressional Budget Office projected that the federal budget deficit will drop to 5.3 percent of the nation’s total output by the end of this year.
For left-leaning writers, at least, it’s almost cliché to note the extent to which the press defers to deficit hawks, despite clear evidence that deficits are not a pressing problem for the United States. Even still, it’s worth noting when reporters pass along received wisdom, especially when we have fresh data to show the folly of Washington’s obsession with deficit reduction. To wit, here’s TheWall Street Journal with a piece that just cedes the idea there’s a deficit problem and it requires further “belt tightening” from the federal government:
Since the start of the new Congress, liberal Democrats have anxiously awaited senior Senator from Massachusetts Elizabeth Warren’s initial moves. Celebrity entrants into the Senate—from Hillary Clinton to Al Franken—have tended to take a modest approach, immersing themselves in committee work and issues of local importance, building relationships with their colleagues, and operating as a “workhorse, not a show horse.” By contrast, Warren said during the campaign that she wanted to use her new position as a platform for her ideas. And one of her first actions suggests she will spend her time as Senator much the way she did as chair of the TARP oversight panel and at the Consumer Financial Protection Bureau: shedding light on the harm caused by unscrupulous financial interests.