Yesterday the Congressional Budget Office weighed in on the Democrats’ proposal to increase the hourly minimum wage from $7.25 to $10.10 by 2016.
The CBO said that increasing the minimum wage to $10.10 could cut 500,000 (+) (-) jobs from the economy. At the same time it would provide 16,400,000 workers a pay increase while lifting 900,000 families out of poverty. In other words there are tradeoffs to be considered.
As one might expect members from both sides of the aisle parsed the report to fit their own partisan needs.
Republicans sited the CBO analysis as certification that the Democratic proposal was a “job killer” that placed a greater economic burden on small businesses already struggling to survive. “If and when Democrats try to push this irresponsible proposal, they should be prepared to explain why up to a million Americans should be kept from having a job.” said Mitch McConnell.
Democrats focused on the 900,000 Americans lifted from poverty and the positive effects giving 16 million a pay raise would have on the economy.
Both parties are viewing this proposal from inside a partisan political vacuum.
First of all we are growing weary of the constant references to the plight of small businesses…the alleged “drivers of our economy.” Small businesses have been handed a host of economic advantages for decades with the false premise that they will grow the economy. From the Bush tax cuts to tax loopholes…subsidies to quantitative easing…the federal government has bent over back words to meet the needs of the small business owner. These “handouts” have generated a sputtering economy, high unemployment and near depression poverty levels...all while the business community enjoys record profits. Enough already!
That said there needs to be an understanding that raising the minimum wage will result in some folks losing their jobs. The CBO says that given the state of our economy the job loss could be infinitesimal or it could go as high as 1 million. They simply don’t know. Practical studies in the past have shown that raising the minimum wage has little effect on unemployment. But we cannot raise the minimum wage in a vacuum.
The president is right when he says that if you work a full time job you should not have to face living in poverty. Hard work resulting in the prospect of a brighter future stands at the core of who we are as a society. It is time to raise the minimum wage. It is the right thing to do…morally and economically. Putting more money into the hands of the people will give them more disposable income to pour right back into the economy. The more money people have the more they will spend in those small businesses that Republicans are so concerned about.
But we cannot rely on a wage increase to fix our economic condition. Raising the minimum wage must be done in conjunction with other programs focused on driving the economy. The fact is what we are suffering from is “joblessness.” There simply aren’t enough jobs to fuel the economy.
So let’s start by resurrecting the president’s American Jobs Act and repair, rebuild and rejuvenate our infrastructure while creating good paying jobs.
We pay billions in unemployment benefits. Instead of tying those benefits to clean drug tests how about dovetailing them with job training programs to help people get the skills they need to be productive in today’s workplace.
And if you are still worried about the plight of Warren Buffet, hedge fund millionaires and the rest of the small business community then how about a four year small business tax cut to offset wage increase transition.
The minimum wage should be increased. It’s the right thing to do. But it cannot be done in a vacuum.