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Jewish World Review
Jan. 7, 2014/ 6 Shevat, 5774
Obama on the minimum wage --- then and now
In coming weeks President Obama and Hill Democrats will launch a new campaign to raise the minimum wage. Working with labor unions and activist groups, Democrats hope to increase the federal minimum wage from its current $7.25 to $10.10. "It's well past the time to raise a minimum wage that in real terms right now is below where it was when Harry Truman was in office," the president declared in his Dec. 4 speech on inequality.
Republicans will argue that raising the minimum wage will hurt the economy, as employers, especially small businesses, hire fewer low-wage workers. It's an argument Obama expects to hear a lot. "Now, we all know the arguments that have been used against a higher minimum wage," he said December 4. "Some say it actually hurts low-wage workers -- businesses will be less likely to hire them. But there's no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth."
Perhaps the key word in that passage is "solid" the president seems to acknowledge that there is evidence a higher minimum wage costs jobs, but he doesn't find it "solid." A few years ago, though, in his 2006 book The Audacity of Hope, Obama seemed much more open to the evidence that raising the minimum wage results in less hiring.
"It may be true as some economists argue that any big jumps in the minimum wage discourage employers from hiring more workers," then-Sen. Obama wrote. Nevertheless, Obama still wanted to do it, so he laid out his best case: "When the minimum wage hasn't been changed in nine years and has less purchasing power in real dollars than it did in 1955, so that someone working full-time today in a minimum-wage job doesn't earn enough to rise out of poverty, such arguments carry less force," Obama added.
Little of Obama's 2006 case applies today. First, the minimum wage was last increased in 2007, and 2008, and 2009 not quite the distance in time that Obama cited in The Audacity of Hope. Second, the minimum wage has had more or less purchasing power in real dollars at various times over the years. Obama's argument (in the inequality speech) that it is below where it was when Truman was in the White House is true of only one of Truman's eight years in office; the rest of that time, the real value of the minimum wage was below where it is today. And today's minimum wage is actually higher in real terms than it was a various points in the 1980s, 1990s, and 2000s.
Third, a minimum-wage worker today does in fact "earn enough to rise out of poverty." A full-time $7.25-an-hour minimum-wage job pays $15,080 a year, while the federal poverty level for an individual is $11,490.
The bottom line is, the case for raising the minimum wage is nowhere near open-and-shut, something Sen. Barack Obama realized before becoming President Barack Obama. But that older, more nuanced view of the minimum wage will likely be absent from Obama's rhetoric in coming weeks; the new campaign will be all about politics. "Democratic Party leaders, bruised by months of attacks on the new health care program, have found an issue they believe can lift their fortunes both locally and nationally in 2014: an increase in the minimum wage," the New York Times reported on Dec. 29. The paper added that leading Democrats hope to use the minimum wage as "not only a wedge issue that they hope will place Republican candidates in a difficult position, but also a tool with which to enlarge the electorate in a nonpresidential election."
That's what is coming. Republicans may hope to discuss the minimum wage as a policy issue rather than a wedge issue. But they'll get no help from the president; the Barack Obama of 2006 won't be around.
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