This week the President once again rolled out the Minimum Wage Gambit. We’ve been over this ground before at the Lifer blog, but it’s worth repeating.
The proposal is pointless in practical terms since it can’t become law and wouldn’t help the economy if it did. It is only significant because of what it says about President Obama and the GOP.
Any Republican response ought to begin by acknowledging the merits of the minimum wage. While it’s true that a wage floor eliminates some jobs, that’s what it is meant to accomplish.
In extreme circumstances, people can find themselves without negotiating leverage in the wage market. A wage floor, along with the rest of the social safety net, legislates out of existence certain jobs which are inherently exploitative.
Along the way it incentivizes technological development, supporting careers in fields like computers and robotics which might not exist if the poorest in society could be starved into submission. Eliminating the wage floor entirely would do more than make the poor poorer. It would pull some of the momentum out of higher-paid industries, sucking wages downward for everyone.
While a minimum wage serves a purpose, it needs to be handled with care. An increase in the minimum wage moves the range of available careers higher up the value scale. However, if we shift it too far then lower-skill workers begin to suffer, seeing the opportunities to launch careers fade….
The Atlantic has a great piece on the proposal:
In short, the black-and-white nature of the minimum wage debate obscures the fact that money doesn’t come from nothing. An increase in wages would require higher costs somewhere, lower incomes for the rich or larger amounts of debt. Those may be legitimate costs to bear, but we shouldn’t pretend that they aren’t an integral part of the equation. We also shouldn’t pretend that increasing the minimum wage is a good proxy for the debate over these issues.
We’d be better off starting this discussion about inequality and its consequences, the nature of a global capital system that sees capital pooling among the wealthy, and an expanding global middle class that is seeing its income increase even as affluent societies see theirs stagnate. Instead, we are left with the hollow symbolism of a minimum wage that few people actually earn, and which, if increased, will leave us no closer to addressing these issues. As the beginning of a discussion, it is welcome; as the end of one, it is one more distraction.