On April 26th Senators Bernie Sanders (I.-Vermont), Patty Murray (D.-Washington) and Chuck Schumer (D.-New York) announced a bill that would raise the national minimum wage to $15 per hour, the first such raise since 2009 and the highest since 1968. Wages for tipped workers would also increase gradually over time and eventually achieve parity with the national minimum wage. The raise would go into full effect by 2024 and then increase according to the median wage. Twenty-three Senators have attached their names to the Raise the Wage Act, a significant increase compared to a similar bill from 2015 which only had six co-sponsors.
According to a paper by David Cooper, an analyst from the Economic Policy Institute (EPI), 41 million people could benefit from this lift in wages, while opponents such as David W. Kreutzer, from the Heritage Foundation, contend that an increase in wages would negatively affect employment.
An Argument Against
In an article for the Heritage Foundation, Kreutzer argues that the “science of economics” simply precludes higher minimum wages, saying “the dismal truth from the science of economics is that when the price of something goes up, people buy less.” According to Kreutzer, once employers such as restaurants and discount department stores are forced to raise wages, they will also have to raise their prices and once that happens customers will purchase less. Fewer purchases means less money to pay for labor. Thus, businesses will be forced to hire fewer people, causing an increase in unemployment. And this, says Kreutzer, would affect primarily low-skilled workers, or “the bottom rung of the jobs ladder.”
So what does Kreutzer suggest, if not a higher minimum wage? He proposes finding ways to place people in high paying jobs ($50K or higher) that don’t require a university degree.
A Thinly Veiled Political Argument
It should be noted that to support his vague sketch of the “laws of economics” Kreutzer merely offers examples of politicians killing wage-raising measures because they “saw the oncoming headlights.” None of these examples are actual instances of failed policy. And regarding his proposal to funnel people toward higher paying jobs, he says nothing of those who would inevitably have to fill lower paying positions at restaurants and discount department stores. It seems these people would have to continue to subsist with meager wages. None of this is surprising, considering the Heritage Foundation is an openly right wing think tank that receives funding from organizations with ties to the Koch Brothers.
An Argument in Favor of Raising the Minimum Wage
Arguing for a minimum wage increase, Cooper says that despite substantial increases in labor productivity over the past 50 years, workers are currently paid 25 percent less per hour than workers in the 1960s. This he says goes against the Fair Labor Standards Act, which was established in 1938 to help ensure that low-income workers benefit from larger improvements in the standard of living. However, since the 1960s, due to inflation, the value of the minimum wage has steadily declined, so that any slight increase in the past 50 or so years has done little to offset this deterioration.
As far as economic justice goes, a higher minimum wage is the bare minimum. Finland for instance is beginning to experiment with a guaranteed income, a move that some think could actually help boost employment. It should be noted that Nixon (of all people) considered pushing for a basic guaranteed income until a free market advisor by the name of Martin Anderson urged the President to oppose the plan.
This isn’t a new idea. In fact, it appears in Thomas More’s 16th century work, Utopia, where it is argued that a basic income would more effectively prevent thievery than the death sentence. A similar argument has been put forward by Common Justice. In the end, measures such as the Raise the Wage Act intend to benefit the millions of workers who have gone unnoticed by politicians for too long.