Minimum Wage Hike Central to Democrat 2014 Plans

Minimum Wage Hike Central to Democrat 2014 Plans

According to Democrat folklore, a national campaign to boost the minimum wage in 2006 swept them into power in Congress. Six states, which all had a number of competitive races, had initiatives on the ballot to hike the state minimum wage. Allied groups like ACORN and labor unions organized voter turnout efforts around the issue. Democrats are returning to this hymnal as a central strategy for the 2014 midterm elections. 

Earlier this year, President Obama proposed increasing the minimum wage from its current $7.25 to $10.10 an hour. In recent months, labor unions have organized protests outside chain restaurants, pushing for a $15 an hour minimum wage. Democrats will use the issue in 2014 to boost turnout of the low-information voters that are critical to the party’s success.  

There are some critical differences between today and 2006 that should blunt the issue’s political impact, however. In 2006, the minimum wage had not been increased for almost a decade and the economy seemed to be growing at a healthy rate. It was not at all clear at the time that much of the growth was based on a Fed-generated housing bubble. The number of people earning the minimum wage was so low, it was hard to envision any major impact on, what seemed to be, an expanding economy.

The 2006 elections also took place in the middle of President George W Bush’s second term. The public was weary from wars in Iraq and Afghanistan, both of which seemed to be spiraling out of control. The Republican party had controlled Congress for more than a decade. In its tenure, the GOP greatly boosted spending and expanded the reach of the federal government, alienating conservatives. The Democrats, whose campaign efforts were led by then-Rep. Rahm Emanuel, recruited “moderate” and “conservative” candidates. A Democrat sweep was probably inevitable, regardless of whether the minimum wage was an issue. 

It was easy to make the minimum wage an issue in 2006, because the economy was expanding and we seemed near full-employment. It is a harder case to make today with a tepid economy and very weak job creation. Add the still uncertain costs of ObamaCare to this, and the case for a hike now is very weak. The issue will continue to poll strongly, but it is hard to see the issue animating voters and driving them to the polls. 

One challenge for Democrats is that almost no one earns the minimum wage. Just around 4% of hourly-paid workers earn the minimum wage. Just 2% of full-time workers earned the minimum wage. In 1979, when the data was first measured, almost 14% of hourly-paid workers earned the minimum wage. 

Because so few people earn the minimum wage, it is easy for Democrats to spin emotive tales of people trying to raise a family on it. Most people wouldn’t consider it possible to raise a family earning just the minimum wage. It would be difficult, but almost no one does this. Almost half of all minimum wage earners with children have household income over $40,000. This is because minimum wage earners are usually the second or third earner in a family. Over half of workers earning the minimum wage are under 25. A third are teenagers. 

The proper way to consider the minimum wage issue is to look at what it actually is, namely a starting wage. It is the wage many of us earned when we first entered the labor force. Almost two-thirds of those earning the minimum wage, in fact, get a raise within the first year. A minimum wage job, then, is the first rung on the job ladder. Mandating a higher starting wage will reduce the number of entry-level jobs available. 

It has been a long time since Democrats and their allies have been concerned with sound economic policy. With so few people earning the minimum wage, a government mandated increase won’t have a major impact on the economy. It will, though, have an impact at the margins, especially for those with low-skills and low-levels of education. In fact, the only people harmed by a minimum wage increase are the exact people Democrats and unions claim they want to help. 

Of course, Democrats don’t care about the economic prospects of the low-skilled. They care about their votes.