This week, the Congressional Budget Office has once again proven itself an able newsmaker, issuing a report scoring the economic impact of a proposal to raise the federal minimum wage from its current $7.25 per hour to $10.10 per hour. And once again, the CBO has produced a reality-based mixed bag.
As HuffPost's Dave Jamieson reported, on the plus side, the increase would "raise the country's collective wages by $31 billion and lift perhaps 900,000 people out of poverty." The downside? The effort would also "likely eliminate an unknown number of jobs, ranging from a "very slight decrease" to as many as 1 million fewer positions. (Most reports split the difference and call it a loss of 500,000 jobs, a figure that many economists still reckon is a bit on the high side.)
The essential spoiler alert for what happened next is best summed up by The Associated Press kicker in its report on the matter: "Democrats say the wage boost would help workers. Republicans have warned it would cost jobs."
The AP's line reverberates with the disaffected tone of one who has seen how these things typically go in Washington, suggesting that here is where the debate goes to die. It doesn't have to be that way! The CBO's study of the minimum wage should catalyze the debate, not end it. At worst, this boils down to a trade-off -- can we afford to sacrifice jobs at this moment in order to give working families an income boost? More realistically, that 500,000-job shortfall may simply be a hurdle, not a wall -- surmountable by combining other policy options.
Unlike the last time we watched a CBO report get tossed into the political fray, conservatives don't have to rely on rhetorical prestidigitation to obscure the difference between a decline in labor supply and a decline in labor demand: The CBO's report on the minimum wage proposal definitely fits with anyone who's looking to get the "#jobkiller" meme trending. This time around, it was Democratic partisans furiously pushing back on the report, proving once again that the good people of the Congressional Budget Office are forever condemned to be the fair-weather BFFs of Beltway policymakers.
If we get beyond the tribal politics, however, this week's CBO report offers a pretty fertile terrain for a debate. Democrats see tremendous virtue in using a federal minimum wage hike to offer a jolt to the working class -- it's essentially a stimulus program that doesn't stem from some new round of purely government spending.
Some conservatives argue, however, that minimum wage mechanisms are best left to state governments to manage. It's a reasonable position: State governments have a more intimate awareness of local economic factors, the nature of the workforce, emerging sectors of job growth, and cost-of-living issues. That sort of granular knowledge can potentially enable states to swap out the federal government's hammer with a scalpel, fine-tuning their minimum wage policies with a surgical precision, to better suit their constituents. (Of course, the same logic applies to allowing states to determine the specifics of welfare work-requirement standards, which is why it was mystifying to me to watch the GOP stage a whine-time cabaret when the Obama administration proposed to grant the states this flexibility.)
The CBO report also allows us to revisit a richer, wonkier debate over what should, at this point in our post-crash lives, be prioritized: A push toward full-employment, or an effort to reduce income inequality. It can be argued, of course, that efforts to ameliorate one are served by an effort to ameliorate the other. (Here is Derek Thompson, making that argument.) But the question of whether we should lift 900,000 people out of poverty at the expense of 500,000 jobs is akin to a question that Ezra Klein asked when he embarked on the "unemployment vs. inequality" debate: "Imagine you were given a choice between reducing income inequality by 50 percent and reducing unemployment by 50 percent. Which would you choose?"
Given the chance to choose, I say: Let's raise the minimum wage!
It's not, by any means, a glib decision. We remain in the throes of a severe unemployment crisis. And my thinking is colored by own experiences with long-term unemployment and how harrowing it was to endure. As one of the few people who live within the Beltway who doesn't treat unemployment as if it's a problem that solely bedevils the electoral prospects of wealthy political celebrities, the thought of casting a vote for a policy that could cost a half-million jobs feels a little like I'm distancing myself from my values.
But as Kevin Drum notes, as far as the CBO's ruling on the minimum wage proposal goes, it's "not bad":
In the real world, there's no such thing as a policy that has benefits with zero costs. There are always compromises. In this case, in return for the small job losses, 16 million workers would get a direct wage increase; another 8 million would get an indirect wage increase; and nearly a million workers would be lifted out of poverty. That's about as good as it gets.
And it's also maybe too good to pass up. But what can be done about the political problem posed by that not-insubstantial decrease in labor demand? Is it completely unresolveable? I wonder if, perhaps, the CBO has analyzed any other policy options that could provide the means of offsetting the losses incurred by raising wages?
Oh, hey, what's that, Jonathan Chait?
Republicans weeping for the half-million or so jobs that would be destroyed by a higher minimum wage would be shocked to learn that, according to the CBO, they have destroyed 200,000 jobs by blocking the extension of emergency unemployment benefits (which lift the incomes of destitute workers, creating higher demand). Likewise, the budget sequestration they have embraced as their cherished second-term Obama trophy has destroyed 900,000 jobs.
Oh, hey, lookee there! Suddenly there's a path toward getting us back in the black, employment-wise. Extending unemployment benefits claws back a tidy amount of the losses on its own, and provides the added benefit of fewer people starving to death or dying from exposure.
And the sequestration should be repealed with all deliberate haste. If you recall, the sequestration was specifically designed to be the stupidest, most America-destroying way possible of cutting the federal budget, the reasoning being that it was so insane and psychotic that the so-called supercommittee would be driven to do anything possible to avoid its enactment. Sadly, that ended up being a historic whoopsie-daisy from the whoopsie-daisiest Congress in living memory. As bad as that is, however, those that now see sequestration as the logical baseline of future budget proposals -- lookin' at you, House Republicans! -- have done the country dirtier. When it comes to job-murderers, they are the most bloodthirsty killers.
Obviously, getting any one of these policy fixes -- let alone all three -- over the goal line is a tough hang. But the possibilities, nevertheless, exist. And so everyone who looks at the CBO's minimum wage report and sees the job losses as a debate-ender needs to calm down. As it turns out, there's more than one way to skin the unemployment-alleviating cat. And as long as you can couple a minimum wage increase with other policies that make eminent sense, and scratch out the downside of the wage increase, I say, keep pressing for the wage increase.
And hey, it looks to me like you can combine policies in such a way that you end up with a net gain of jobs. But you know what? I'm willing to forsake that. As both Josh Barro and Matt Yglesias argue, any raise to the minimum wage that does not feature some adverse effects on the unemployment level is probably not an adequate raise to the minimum wage. So I'm willing to split the baby here: If a combination of policies end up with a net gain in jobs, let's keep on pushing the minimum wage up until we zero it out. Let's make this "employment neutral," and lift even more people out of poverty.
Naturally, there's not a hope in hell that any of this is going to pass Congress anytime soon. President Barack Obama, in pushing for a minimum wage increase that likely won't wend its way to his desk, is of course opening himself up to criticism from the cognitively shortchanged Beltway media. But they miss the point. Right now, there is momentum building for these sorts of wage increases. More than a dozen states have already shifted wages in the right direction. Others may follow. Obama is adding creatine to this scene, facilitating change in a favorable environment.
The White House's allies have, in the immediate wake of the CBO's findings, challenged the downsides to the report. It's perhaps understandable -- that does seem to be the default setting whenever a CBO report doesn't offer everyone modest increases in both peaches and cream. But remember, the CBO reports economic projections, not economic destinies. So, rather than pretend that this wage-for-jobs trade-off can be reasoned out of existence, they should embrace the trade-off and set themselves to the challenge of offering the means by which those job losses are pared down.
Doing so would set this minimum wage discussion, already brimming with momentum, on a reasonable, sensible, and responsible path. Ordinary Americans worry about wages, but they're just as worried about joblessness. So if you believe they deserve an income boost, then they deserve concern and consideration as well.
And hey, why not be nice to the CBO for a change? Jeez, that Douglas Elmendorf guy looks like he could use a hug.
"I DON'T THINK I WILL EVER DRINK THE WATER...I AM TOO SCARED": CNN's Brian Stelter calls the Elk River chemical spill an "outrageous example" of the media grotesquely under-covering a story. True, true! So here's The Guardian's Suzanne Goldberg with an object lesson in how to do it. Goldberg traveled to West Virginia and offers several first-person accounts of what it's like to have your water supply poisoned by unaccountable chemical companies.
WANT SOME JOE STIGLITZ TALKING ABOUT INCOME INEQUALITY?: Here's some Joe Stiglitz talking about income inequality:
"The basic point that I raised a half-decade ago was that, in a fundamental sense, the U.S. economy was sick even before the crisis: it was only an asset-price bubble, created through lax regulation and low interest rates, that had made the economy seem robust. Beneath the surface, numerous problems were festering: growing inequality; an unmet need for structural reform (moving from a manufacturing-based economy to services and adapting to changing global comparative advantages); persistent global imbalances; and a financial system more attuned to speculating than to making investments that would create jobs, increase productivity, and redeploy surpluses to maximize social returns."
If you've got a story you want to share on Sunday, feel free to drop me a line!
"SHE'S LIKE NUCLEAR ENERGY": Protestors in Kiev won a surprise concession Friday -- the freedom of opposition figure Yulia Tymoshenko, who's been in prison for more than two years. "So," you may be asking yourself, "what's her whole deal?" Here's a 2010 profile of Tymoshenko from Julia Ioffe to answer that question.
LOOKING AT YOU, JAMIE DIMON: Does it ever seem to you like the world's elites get to screw up and screw up and break rules and ruin lives and back insane wars forever and ever without consequence, while those who critique these failures have to somehow manage to be perfect in every way to avoid being completely delegitimized? Conor Friedersdorf is feeling you:
For some reason, the press is complicit in a system by which groups challenging elites are deemed unserious due to the presence of any incompetent or radical fringe ... whereas, say, presiding over 9/11, and then responding with a radical program of torture and a catastrophic war gets a president reelected and celebrated; and a Wall Street meltdown is followed by a bailout and record bonuses. To be taken seriously, those who critique elites must be without flaws, whereas the elites themselves are forgiven their most egregious errors in judgment.
This would be a pretty good time to send people to this Felix Salmon piece: "The JP Morgan apologists of CNBC."
THIS WEEK IN RACE-BASED SOCIAL EXPERIMENTS THAT WILL NOT RESTORE YOUR FAITH IN HUMANITY: Fun fact: "Whites committed 64 percent of motor vehicle theft in 2011." So when the Simple Misfits gang took to the streets, and simulated a car being broken into -- first by a white guy and then by a black guy -- how long do you think it took for the cops to be called in each case? SPOILER HINT: Those of you hoping for some sort of early-M. Night Shyamalan twist ending are going to be super-disappointed.
TRUTH BOMBING THE 1990s: While I think you should fear the people who tell you that they "like, TOTALLY identify with Holden Caulfield" more, the people who admit to being able to relate to the characters of 1994 indie film "Reality Bites," have always seemed almost as worrisome. Well, Jezebel's Lindy West rewatched the movie recently and can confirm these suspicions, concluding that the movie is a "Manual For Shitheads." So I guess the '90s weren't perfect after all. (I've always been a little bit "meh" on Bret Easton Ellis, too, if you want to know the God's honest truth.)