Friday, 1 May 2015
Democrats Proposed a $12 Minimum Wage. Is That a Good Idea?
n February 2013, President Barack Obama proposed raising the minimum wage from $7.25 per hour to $9 per hour. Former Senator Tom Harkin and former Representative George Miller deemed that insufficient and counter-proposed a raise to $10.10 per hour. By November that year, the president agreed with them.
Now, congressional Democrats are trying to push the minimum wage even higher: On Thursday, Senator Patty Murray and Representative Bobby Scott introduced the “Raise the Wage” Act, which would raise the minimum wage to $12 per hour by 2020.1 Senate Minority Leader Harry Reid, House Minority Leader Nancy Pelosi, and Labor Secretary Thomas Perez joined Murray and Scott at a press conference Thursday afternoon. (Perez announced that Obama “enthusiastically supports” the bill.) It’s an indication that the plan has wide support in the Democratic Party.
But is it a good idea? Probably, even though it carries some economic risks. Here’s why.
Raising the minimum wage to $12 per hour—a 39.6 percent increase—may seem large, but it’s not unprecedented. Congress last raised the minimum wage in 2007, hiking it from $5.15 to $7.25—a 41 percent increase that took effect over four years.
If Murray-Scott passes, the $12 per hour minimum wage wouldn’t kick in until 2020, five years from now. In fact, according to a new study from the left-leaning Economic Policy Institute, the annual percentage increase in the minimum wage would peak at 12.5 percent in the second year. (When the minimum wage rose from 2007 to 2008, it increased by 13.6 percent.) So while Murray-Scott’s $4.75 increase is larger than any previous minimum wage hike in nominal terms, it’s nothing unprecedented in relative terms.
Conservatives will likely argue that those previous minimum wage hikes cost the country jobs, so policymakers should expect the same from Murray-Scott. But as Jared Bernstein—the former chief economist to Vice President Joe Biden—explains at the Washington Post, the academic evidence on minimum wage hikes shows at most very modest negative effects on employment.
The biggest concern with Murray-Scott, though, is that it uses a one-size-fits-all policy to adjust the minimum wage each year. Unlike most minimum wage proposals, Murray and Scott don’t propose adjusting wages each year to keep up with inflation. Instead, they would increase it each year to keep up with median wages, the midpoint of the wage distribution. If median wages rose 1 percent, then the minimum wage would rise 1 percent. As economist Arindrajit Dube has explained, this is a good idea—but it should be done at the state level, not nationally.
Workers don’t actually care that much about their wage level. They care about what they can buy at that wage level—and the median income of an area is a good proxy for its cost-of-living. The U.S. minimum wage, relative to its median income, is currently one of the lowest in the developed world. The majority of countries cluster around the minimum wage being equal to 50 percent of the median wage. According to EPI’s new study, Murray-Scott would raise the minimum wage so that it equals 54.1 percent of the U.S. median wage in 2020. That would put America slightly above most nations but below Turkey, France, and a few other countries.
Adam Peck
While Murray and Scott are correct to focus on increasing the minimum wage relative to the median, they fail to account for regional price differences. In states with lower median wages like Mississippi, Arkansas and West Virginia, a $12 per hour minimum wage will lead to a minimum wage to median wage ratio of around 60-70 percent. That’s above almost any other advanced economy.2
EPI’s economists argue that this isn’t that concerning because the minimum wage to median wage ratio was near 70 percent in low-wage states in 1968. “We think there’s every reason to believe, since there didn’t seem to be any significant negative effects back in the ’60s, we wouldn’t anticipate them now,” David Cooper, an economic analyst at EPI and one of the authors of the study, said in an interview.
Economic Policy Institute
That’s fair. But I still am concerned about the timing of Murray-Scott. In low-wage Southern states, the minimum wage would become a much higher percentage of the median wage in a relatively short timespan. Consider Alabama, where the median wage was $14.83 in 2014. The minimum wage to median wage ratio was 48.9 percent last year. According to EPI, Alabama’s ratio under Murray-Scott would rise to around 65.1 percent in 2020. There’s no academic evidence of such a rapid increase in the minimum wage to median wage ratio. Low-wage employers in those states could have a significant trouble adjusting to the law.
“I don’t think we know exactly what would happen because this is a bolder proposal than we’ve seen in recent times,” Cooper said. “But from what we do know, we don’t think it would be too onerous even in lower-wage states.”
Over a longer timeframe, Murray-Scott also could hurt minimum wage workers in low-wage states. For instance, imagine if the median wage grows at half the pace in Alabama as it does nationally (1 percent vs. 2 percent, for example). Alabama’s minimum wage will increase by 2 percent, not 1 percent, since the minimum wage rises based on national median wage growth. While the national minimum wage to median wage ratio will stay constant, Alabama’s ratio will rise. Remember, Alabama and other low-wage states already have high minimum wage to median wage ratio. If this happens over a long enough period, the negative employment effects could become significant.
To be clear, there’s evidence that the opposite will probably happen. Wages in low-wage states have been growing faster than those in high-wage states. Under those circumstances, the minimum wage to median wage ratio in low wage states will fall, reducing any potential negative employment effects as a result of the minimum wage hike.
“In the longer run, I think we would do well to consider having multiple federal standards that vary by region: that would mean to reach 50% of median, some places would have minimums higher than 12; others would have minimums that are lower,” Dube, who supports tying the minimum wage to either the Consumer Price Index or the median wage, wrote in an email. “Meanwhile, it is reassuring that there has been some regional convergence in the median wages, which reduces the differential bites of a federal standard.”
The problem with setting one minimum wage policy on the national level is that policymakers can’t account for the variation in state wages. If current wages trends don’t change, Murray-Scott would be great for low-income workers. But if it changes—especially if wage growth declines in low wage states—then Murray-Scott would exacerbate the biggest flaws in current minimum wage policy. Democrats must be aware of that risk.
1 Each successive minimum wage proposal is larger than the previous ones even after accounting for inflation.
2 To be fair, that’s not an apples-to-apples comparison. Within Turkey and France, certain areas surely have a higher minimum wage to median wage ratios. But it does show that low-wage U.S. states will have worryingly high ratios.
Danny Vinik is a staff writer at The New Republic.
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Democrats: 1,130 Iowa teachers have gotten pink slips
Many Democrats in the Iowa legislature are wearing pink today, as a show of support for hundreds of Iowa teachers who’ve gotten “pink slips” due to uncertainty about state support of public schools.
Representative Cindy Winckler, a Democrat from Davenport, is a former classroom teacher.
“Waiting this long to make that decision hurts the school districts, but it hurts Iowa,” Winckler said during a statehouse news conference.
By law, the decision should have been made almost 15 months ago and school administrators were faced to make budget decisions this month for the school year that begins this fall. Senate Democratic Leader Mike Gronstal of Council Bluffs says as of today (Thursday), Iowa school administrators report sending out 1130 “pink slip” lay off notices to teachers.
“I’m wearing a pink tie today in solidarity with the children and families of the state of Iowa,” Gronstal said during the weekly news conference Democratic leaders hold during the legislative session. “We’re going to have more crowded classrooms, more kids are going to fall through the cracks, more programs are going to be dropped.”
After Democrats offered to “split the difference” between what Democrats and Republicans had proposed, Gronstal said he’s offered “some ideas” to Republicans, in private, to try to resolve this school funding impasse.
“We’re going to wait until they decide to talk with us about some middle ground, but we’re not going to keep throwing out half-steps and hope that they sometime bite,” Gronstal said.
House Speaker Kraig Paulsen, a Republican from Hiawatha, has repeatedly said Republicans want to change the law, so legislators can make spending decisions on state aid to public schools just before the school year starts, rather than more than a year in advance.
“It’s a frustrating situation. We think it’s wise and prudent to make the decision when you’re in the proper position to make it,” Paulsen said today during Republican leaders’ weekly statehouse news conference.
Republicans have stuck to the offer they made in January, calling for a one-and-a-quarter percent increase in general state aid to schools. Paulsen calls that a “lean forward” position that did not change when state revenue forecasts were decreased by 19-million dollars.
“We understand the significance of it,” Paulsen said today. “We want to get it done. It’s why it was the first commitment we made….It’s the first bite out of the apple. It’s the biggest bite out of the apple. It’s 55 cents out of every new dollar the state has coming in is what’s going to K-12.”
That includes $50 million in new spending for year three of the teacher leadership program that was passed by legislators in 2013 as well as the House GOP’s recommendation to increase general state aid to schools by 1.25 percent.
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Charles Lane: Hillary gets zigged by the Democrats zagging left wing
As if the flap over fundraising at her family foundation weren’t enough, now Hillary Rodham Clinton has to deal with Bernie Sanders.
The big story here is that an avowed socialist who voted with the Democratic Party in the Senate, but wouldn’t join it, now feels comfortable seeking its presidential nomination. This says a lot about the party’s long-term ideological trajectory, and Clinton’s compatibility with it, or lack thereof.
Though hardly a conservative, her record puts her to the right of a Democratic Party that has been gradually taken over by its left wing in the 20-plus years since a centrist Bill Clinton, accompanied by then-first lady Hillary, first gained the White House, as former Clinton White House political strategist Doug Sosnik argued in an influential 2014 article for Politico Magazine.
Clinton remade herself as a centrist after being criticized as a leftist, now she must recast herself as a progressive to satisfy the left.
In 2014, a Pew Research Center survey found that rank-and-file Democrats were almost twice as likely to describe themselves as “mostly or consistently liberal” as they were in 1994 (56 percent in 2014 vs. 30 percent in 1994). The party’s activists and leaders are even more left-leaning, with 70 percent of them pronouncing themselves consistent liberals in 2014, as opposed to 35 percent in 1994.
Sosnik identified the improved funding and organization of left-wing groups, as well as the electorate’s increasing demographic diversity and leftward drift on cultural issues, as factors favouring the liberal Democratic ascent. To that list of factors should be added the Iraq and Afghanistan wars and the financial crisis, which damaged public confidence in U.S. foreign policy and U.S. capitalism, respectively.
Will Democrats swallow their ideology for a chance to elect a woman president?
Alas for Hillary, the record of her husband’s administration — and even her own record as a senator and as a secretary of state sympathetic to the use of force abroad — reflected the lessons of older events — specifically, the defeat of Michael Dukakis by George H.W. Bush in 1988 and the loss of the House of Representatives to Newt Gingrich’s Republicans in 1994, both of which taught Democrats to fear getting outflanked on the right.
As a result, she now faces the Sanders challenge. Indeed, so discredited is centrism within the Democratic Party that former Maryland Gov. Martin O’Malley, who planned a similar left-populist campaign against Clinton, finds himself on the defensive over his law-and-order policies as mayor of Baltimore in the early ’90s. In tune with those different times, O’Malley’s approach is now being blamed for police brutality in Charm City.
Oh, the ironies. Hillary figured in conservative demonology as the radical power behind her husband’s throne and got blamed for the failure of an allegedly overly liberal Clinton administration health insurance proposal; so she remade herself as a centrist.
Now that’s inconvenient, so she must recast herself as a true progressive. On Wednesday, Clinton offered criminal justice reforms that implicitly repudiate tough federal sentencing laws that her husband signed, and she lavishly praised David Dinkins — the one-term Democratic mayor of New York whose perceived failures to control crime paved the way to his election defeat by Republican Rudy Giuliani in 1993.
Meanwhile, she has almost been silenced on President Barack Obama’s proposed free-trade agreement with 11 Pacific Rim nations — itself possibly a last vestige of Democratic pro-business centrism. She supported it as secretary of state, and it’s a lineal descendant of her husband’s North American Free Trade Agreement. Yet labor and other liberal interest groups are trying to establish opposition to free trade as the post-Obama party line — it’s a key issue for Sanders. So Hillary is reduced to noncommittal platitudes.
She seems always to be zigging when history zags. Whether this costs her the nomination, though, is another question. She enjoys the backing of a vast network of elected officials, donors and hangers-on; the chance to elect the first female president will induce many Democrats to swallow their ideological misgivings.
The likely effect — and intent — of a Sanders challenge is to push both Clinton’s campaign and her administration, if there is one, further left, thus consolidating liberal control of the party.
The risk, for Clinton and the Democrats generally, is that they over-interpret the country’s mood, which is increasingly culturally liberal — but still deeply skeptical of federal competence and trustworthiness. “Democratic activists will need to reconcile the public’s desire for smaller government with their own progressive impulses,” Sosnik warned.
Almost 20 years have passed since President Clinton declared, “The era of big government is over.” If Hillary hopes to be the next President Clinton, that’s one part of her husband’s legacy she may not want to repudiate.
Washington Post
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Democrats Propose Most Ambitious Minimum Wage Bill Yet
Sen. Patty Murray (D-WA) and Rep. Robert Scott (D-VA) are introducing a minimum wage bill on Thursday that would raise the federal floor from its current level of $7.25 an hour to $12 an hour by 2020, eliminate the lower tipped minimum wage that currently stands at $2.13 an hour, and automatically increase it as median wages rise.
Much of that plan is brand new. Previously, Democrats had set their sights on a minimum wage increase to $10.10 an hour, indexed to inflation thereafter, and only raised the tipped minimum wage to 70 percent of the regular minimum wage.
Sen. Murray said she took inspiration from the state she represents in deciding to get rid of the lower tipped wage. “Tipped workers are most exposed to the ups and downs of the economy. The unpredictability of wages makes it even more difficult to make ends meet, on top of trying to scrape by on low wages. So eliminating the tipped wage is long overdue,” she told ThinkProgress in emailed statements. “Washington state has led the way in this, and we’ve seen that it works for restaurants, businesses, and workers.”
Murray also told ThinkProgress that Washington inspired her to target a higher wage level. “There has been great work done in Washington state and across the country to increase wages even further to help the families and businesses in those communities, and I support those efforts,” she said. Washington has long had the highest wage in the country, which is currently $9.47.
A $10.10 wage would have brought it in line with about where it would have been if it had kept up with inflation since its peak in 1968. But this was, according to economist David Cooper with the Economic Policy Institute who has worked with lawmakers on crafting the $12 wage bill, “the lowest possible threshold for where you could be aiming.” He added, “What you’re saying is that low-wage workers should have seen no material improvement in their standard of living over the last 50 years.” That’s despite the fact that there has been significant economic growth, driven in part by rapidly increasing worker productivity.
Even though the Republican-led Congress is unlikely to take such a bill up, Democrats have recently decided they need to take the debate around the minimum wage further. The new benchmark, Cooper said, is to “return the minimum wage to where the distance between the lower paid worker and typical worker is no greater than it was back then.” If lawmakers use a ratio of the minimum wage to the median wage for all workers, which was 52 percent back in 1968, then a $12 wage by 2020 makes a lot of sense, as it would bring the minimum up to 54 percent of the median wage, which today stands at just over $17 an hour. “It’s essentially returning the minimum wage to the same value it had in 1968 in relative terms,” he said.
Real-life experiments beyond Washington state also help give a higher wage level credibility. The majority of states have now raised their minimum wages above $7.25, and evidence shows that critics of a higher wage who worry about job losses may not have a reason to fear an increase. Last year, job growth wasactually stronger in states that raised their wages than in those that didn’t, and economics have generally found that minimum wage increases have little impact on job growth. Even fears that Seattle’s increase to $15 an hour were making businesses close were overblown. “Places are pushing minimum wages into territory that we haven’t done before, and the sky hasn’t fallen,” Cooper noted.
Democrats may also have been pushed into a higher wage by low-wage workers who organized and staged repeated strikes demanding a $15 minimum wage in the fast food, retail, home care, and adjunct professor industries. “I think the Fight for 15 [movement] started to recalibrate people’s thinking in terms of what the minimum wage could be,” Cooper said. “From a political standpoint and also from a national awareness standpoint, the Fight for 15 just did a fantastic job highlighting how low pay is in a lot of these industries.”
That kind of national movement has paved the way for lawmakers to reach higher. “I think the Fight for 15 has created space for Democrats, for any politician, to come out in favor of a minimum wage in the $12 range and look reasonable,” he noted. While Congress isn’t looking at a federal $15 minimum wage at this point, some cities and states have taken up the call. Seattle andSan Francisco have passed wage hikes to that level, and many other cities and even some states are considering doing the same.
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Thursday, 30 April 2015
Good News for Democrats Courting Millennial Voters
If Democrats can turn out millennial voters for the presidential race in 2016, their downballot candidates may just get the boost they’re looking for from the 18- to 29-year-old crowd.
A Harvard Institute of Politics poll released Wednesday found a significant majority of millennial voters most likely to vote — 55 percent — wanted Democrats to hold onto the White House in 2016. Forty percent would prefer a Republican commander in chief. The poll, which was conducted online from March 18 to April 1, surveyed more than 3,000 adults nationwide ages 18 to 29.
While this poll did not ask about control of Congress, the 15-point margin for a Democratic White House was a shift from the partisan narrative told by Harvard’s October 2014 millennial poll, which gave Republicans a slight edge going into the midterm elections.
President Barack Obama’s approval rating among millennials increased to 50 percent — up 7 points since the fall of 2014, perhaps in part because a higher percentage now approves of the way the president is handling the economy.
Millennials continued to have the lowest levels of trust — 17 percent — in Congress, compared to other parts of government, although their confidence in the institution has increased 3 points since last year. Congressional Republicans, though, still suffered from a 23 percent approval rating among this crowd, while congressional Democrats have enjoyed a 5-point boost since October and were at 40 percent.
In a hypothetical primary matchup, former Secretary of State Hillary Rodham Clinton lead the Democratic field with 47 percent support, followed in far-off second place by Massachusetts Sen. Elizabeth Warren.
Democrats are already banking on Clinton boosting their House and Senate candidates, women specifically. In an appeal to youth voters, the House Democratic Caucus sent some of its youngest members on the road earlier this month in its so-called “Future Forum.”
Ben Carson lead the Republicans in a hypothetical matchup, but given the 2- to 3-point margin of error, the GOP field was really a statistical dead heat, Polling Director John Della Volpe said on a conference call with reporters Wednesday.
The survey also tested millennials’ stance on a number of public opinion issues that could influence their downballot voting.
The Affordable Care Act was a political football in the past two elections and undoubtedly will be again in 2016. Among millennials, 45 percent agreed “basic health insurance is a right for all people,” an increase of 3 points from 2014.
On fiscal issues, more millennials continued to disagree when asked if government spending is “an effective way to increase economic growth.”
When it comes to foreign policy, 57 percent of millennials believed the U.S. should use ground troops to confront the Islamic State group, and there had been a 7-point increase in support for the so-called Bush Doctrine, which the poll defined as the need to sometimes “attack potentially hostile countries, rather than waiting until we are attacked to respond.”
Millennials’ opinions of the justice system were evenly split, with half saying it was unable to judge people without racial or ethnic bias. Confidence was lowest among African Americans and people with less than $50,000 in household wealth. An overwhelming 80 percent of millennials said they thought requiring police to wear body cameras would reduce “racial inequalities in the criminal justice system.”
Of interest to candidates in all races should be the survey’s findings about millennials’ digital engagement. Overall, millennials are much more likely to sign an online petition or “like” a candidate on Facebook than advocate by email or Twitter. Democrats are more likely than Republicans to be on Twitter, and twice as likely to be on Tumblr. Republicans are more likely to be on Pinterest.
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