This year Democrats face a grueling election challenge -- holding on to the Senate. In the face of relentless Republican obstructionism, the American public has turned against a do-nothing Congress, and because Democrats are in the majority in the Senate, they will be blamed for congressional gridlock. To combat this general anti-Congress sentiment, Democrats need an issue popular with the American public -- an issue that differentiates them from the Republican opposition. The policy that can most effectively do this for Democrats? The minimum wage.
Over the last few months we have seen a tremendous upsurge in activism on raising the minimum wage. From grassroots level protests among fast food workers to city and state level legislation -- people all across the country are standing up to be heard, and their message is clear: America deserves a raise.
Of course this feeling is not shared by everyone -- if you're fortunate enough to be among the highest income earners, then you might think that the recovery is going just fine. That's because this has been one of the most unequal recoveries in recent memory. The top 10% of wage earners have taken all the income growth of the last 3 years, while the bottom 90% will have seen no income growth at all over the same period, and the bottom 50% of Americans will actually have seen their income decline. Given this reality, it's understandable why so many people are demanding the government act to raise the minimum wage. For average Americans the "recovery" that is touted by policy makers and the media doesn't actually exist.
But even when acknowledging that the so-called economic recovery has been skewed to favor top income earners, many are skeptical of the value of a minimum wage increase. They claim that an increase will lead to higher prices and layoffs -- and will ultimately do more harm than good. The evidence suggests otherwise.
The 13 states who raised their minimum wage at the beginning of this year have actually witnessed faster job growth than the national average, suggesting that whatever negative impacts a minimum wage increase might have on employment could easily be negated by other factors allowing low wage workers to enjoy higher wages without harming the recovery.
On the contrary under current labor market conditions, where low consumer demand is holding businesses back from expanding their payrolls and making new investments, raising the minimum wage would act as a catalyst for new hiring. Because low-wage workers are more likely than any other income group to spend additional earnings they receive, in a period of depressed consumer demand an increase in the minimum wage would stimulate overall economic activity by shifting income to those who would spend it immediately.
Another argument against raising the minimum wage is the claim that it would affect only a relatively small number of American workers. The Pew Research Center found in a recent study that only 3.3 million workers made at or below the federal minimum wage -- only 2.6% of all wage and salary workers. But this overlooks the fact that many of those who would be impacted by a minimum wage increase are low wage workers who make slightly above the current minimum wage. So it won't be just 2.6 percent of the workforce that sees a bump in their paychecks -- the Brookings Institute found that nearly a third of the workforce would see their wages rise from a likely minimum wage increase.
The proposed federal minimum wage increase would not be unprecedented. The 10.10 minimum wage bill before Congress would merely restore the minimum wage to its earlier peak in the 1960s. Given that in the following decades American productivity has increased even as wages have stagnated, the country could easily afford a return to these prior levels.
The bottom line is that a minimum wage increase will positively affect a sizable portion of the population, will have a moderate stimulative effect on the economy, and will be easily affordable. And by indexing it to inflation as the Harkin-Miller bill suggests, it would ensure that low income American workers would not risk seeing their wages eroded during the next recession.
Democrats ought to be pushing this issue non-stop. It's a national winner with a full 73% of the public in favor of raising the federal minimum wage from its current level of $7.25 an hour to $10.10. It would also be an easy way to fire up the Democratic base at a time when many other progressive priorities have floundered in Congress. With 91% of Democrats supporting a wage increase, making the minimum wage a priority is not only the right thing to do it's the smart thing to do as well.