On February 12, 2013, in the first State of the Union Address of his second term, President Obama urged for an increase in the federal minimum wage to $9.00 an hour. He lamented the reality that an individual can work full-time in the United States and earn a paltry $14,500 a year. Likewise, he implied that even with the assistance offered by the tax code, families helmed by minimum wage workers are often mired in poverty. He entreated the audience in the chamber and at home with the inclusive contraction, "let's," to declare that "in the wealthiest nation on Earth, no one who works full-time should have to live in poverty." He ended this rousing section of the speech by further imploring that the minimum wage should be tethered to the cost of living, so that it "finally becomes a wage you can live on."
President Obama's remarks resurrected the nearly century-old debate about the economic impact of raising the minimum wage. Conservatives instantly declared an increase in the minimum wage a "job-killer." Fox Business blogger Gerri Willis warned that "raising the minimum wage could be just about the worst thing he [President Obama] could do for the jobs market." Speaker of the House John Boehner echoed this sentiment stating that "when you raise the price of employment ... you get less of it." Liberals responded quickly and assertively. Rachel Maddow pounced, declaring Boehner's remarks as factually untrue. Ezra Klein at the Washington Post produced a compelling graph to illustrate skyrocketing corporate profits and stagnant wages. This chart, Klein wrote, "should begin all discussions of the minimum wage, and whether we need to increase it." The Atlantic elided a range of positions in a piece titled, "Helpful, Harmful, or Hype? 5 Economists Weigh In on Obama's Minimum-Wage Proposal." It quoted various economists who appear to agree that an increase in the minimum wage has both a slight effect on employment and limited, but tangible, benefits for workers.
Even without the aid of these noted economists, anyone can see that increases in the federal minimum wage have not delivered families from poverty. Ultimately, an increase in the minimum wage is feel-good, lip-service legislation that offers little long-term benefit to its recipients.
Some argue that the additional $280 per month in gross income provided by an increase in the minimum wage would be a substantial windfall for the average worker and a stimulus for the economy. This extra income could pay for shelter, medicine, or childcare for a family that desperately needs it. What's wrong with that?
The economic boon of a wage increase will be short-lived. Extra cash will be quickly incinerated in the flames of the predatory American economy. Money not instantly consumed for basic necessities -- food, shelter, utilities, transportation, clothing, education, and health care -- will be picked over by vulturous entities that profit from the desperation of the poor. Cash-strapped states will relentlessly market the lottery to them. Calculating payday loan companies will offer to bridge the gap for those living paycheck to paycheck with confiscatory fees. Slick casinos will beckon with low-cost buffets and empty promises of easy winnings. Big box retailers will court them with gift cards and giveaways.
Likewise, inflation will nibble away at the spending power of this increase. Businesses eager to maintain their margins will simply pass their increased labor costs to the consumer in the form of increased prices or reduced services. In addition, an increase in the minimum wage means that businesses have to adjust all workers' wages upward to maintain the equity of their pay scales. Within a year, the economy will recalibrate and negate the impact of this increase and the plight of the poor will be unchanged yet again.
In addition to its complete inability to fundamentally alter the conditions of people's' lives, a battle over the minimum wage invites age-old partisan fights and the kind of gridlock Congress has become known for in recent years. In this hostile political climate, it is unclear if any legislation -- no matter how bipartisan in concept and construction -- can pass. Consequently, inciting a partisan brawl over the minimum wage is clearly political posturing on the part of the Democrats rather than a sincere attempt to solve a deepening problem.
This clash is another example of how short-term political posturing leads to ad-hoc legislation that treats the symptom of a problem and not its root cause.