Marketplace, May 19, 2004
The last time the minimum wage was raised was in August of 1996. And, full disclosure, as Labor secretary, I fought like hell for it. Since then, most of that increase has been erased by inflation.
Back in 1996, Republicans argued, as they always do, that an increase in the minimum wage would result in fewer jobs for the least-skilled, lowest-paid workers because they aren't worth the higher pay. What happened was that, as usual, the business cycle was a much more powerful determinate of job growth or loss than a few dollars of wages. Between the time the minimum wage was raised in 1996 and the year 2000, American businesses generated over 10 million new jobs, including a record number of jobs for the lowest skilled. And then after the bubble burst and recession set in, three million jobs were lost, including a lot of skilled jobs.
Republicans and Democrats like to fight over the minimum wage because Democrats like to show their constituencies that they care about working people. And Republicans like to show their constituencies that they care about small businesses, which employ most minimum-wage workers.
This time, it looks like Republicans will counter the Democrats proposed $1.85 hike in the minimum wage with their own proposal to hike it only $1.10 over two years. This seventy-five cent difference is likely to generate a lot of fiery rhetoric on both sides of the aisle.
But, surely, Republicans and Democrats should be able to agree to one simple principle: no family with a full-time worker should be in poverty.
Right now, we're drifting further and further away from this goal. Even though the national economy shows signs of recovery, the ranks of the working poor appear to be growing. Many of the new jobs pay the minimum wage, and fewer of them provide health and pension benefits. The Urban Institute estimates that one out of three adults in poverty is working.
Whether it takes a hike in the minimum wage or an expansion of the earned income tax credit, which is a wage subsidy for low-income workers, or some combination of the two, the goal should be to lift every working family out of poverty. The expanding job category known as the "working poor" ought to be an oxymoron.
