Ramesh Ponnuru: Raising minimum wage a bad solution to poverty
05/26/2014 12:00 AM
05/26/2014 7:07 AM
When the federal minimum wage was last raised, in 2007, all but three Republican senators voted for it. The typical pattern for Republicans on minimum-wage increases is to hold out for a while, sometimes even a few years, then acquiesce. In recent days, several prominent Republicans – Mitt Romney, Tim Pawlenty and Rick Santorum – have suggested that it’s time to cave again.
Instead of taking that advice, Republicans should talk about better ways to expand opportunity.
President Obama wants to raise the minimum wage by roughly 40 percent, to $10.10 an hour. That would probably destroy a lot of jobs at the low end of the labor market. The Congressional Budget Office estimates that as a result about 500,000 fewer people would be employed – and it’s not as though we’re coming off years of robust job growth. At the same time, the increase would do surprisingly little to reduce poverty, because most minimum-wage earners aren’t poor.
I assume that Romney and company are familiar with these points and largely agree. Most of Romney’s comments on the issue concerned its political symbolism: “The key for our party is to be able to convince the people who are in the working population, particularly the Hispanic community, that our party will help them get better jobs and better wages.”
Romney and the others are certainly right that the Republican Party’s main political weakness is the perception that its economic agenda would serve the interests only of rich people and big businesses. They’re also right that opposition to a higher minimum wage can strengthen that impression. A Bloomberg poll in March found 69 percent of adults favored the increase.
There is, then, a cynical political case for Republicans to support a higher minimum wage: It might close off opportunities for some people, sure, but the party can still use it to advertise its concern for the economically struggling. (And the people who will lose jobs are disproportionately Democrats.) The choice, then, seems to be between looking bad and doing bad.
There may be a way out of that trap, however. The political power of the minimum wage comes from its appeal to Americans’ values. It doesn’t come from their self-interest: Most voters don’t benefit from it directly. They favor raising the minimum wage because it seems like a way of giving people a leg up and making the economy fairer. Opposition is politically dangerous because it signals indifference to those goals.
If that’s right, then Republicans can mitigate the political harm they incur from opposing an increase. They just need to find different ways to associate themselves with those goals.
One way to do so is to support expanding the earned income tax credit, an earnings subsidy that targets poor households much better than the minimum wage does and poses no threat of destroying jobs. That credit may not be as easily understood as the minimum wage, but it would give Republicans a way to show that they want to help the poor – and that their stated objections to raising the minimum wage are sincere.
They should also broaden the discussion beyond the take-home pay of the lowest earners. Many middle-class families feel as though they’re running in place, at best. Wages have been flat for some time, and many costs that weigh heavily on people’s minds, such as college tuition, keep going up. These trends have convinced many people that the economy has gone badly wrong and become fundamentally unfair.
Republicans should attack both ends of the problem. Rising health-insurance premiums are a big reason wages have stagnated. Scaling back the tax break for the most expensive policies, as part of a market-based reform of health care, could help wages rise again.
And wages would stretch further if costs were lower. Higher education seems ripe for reforms that make financing easier and create lower-cost alternatives to a traditional four-year degree. Energy costs could be restrained through increased exploration and decreased regulatory mandates. The cost of raising children would fall if the tax code did more to recognize it as an investment in the future.
Republicans are on the defensive, stuck debating whether to oppose an increase in the minimum wage or accept it, because they aren’t advancing compelling ideas of their own. They should answer the president’s push for the increase, and the larger campaign against economic inequality, by changing the subject to something more important: how to create broad-based prosperity.
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