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The "Populist" Fight for a Minimum Wage?

The "much-delayed increase in the minimum wage" is being pushed by "populists" (not liberals?).

Business reporter Louis Uchitelle, who apparently favors a doubling of the minimum wage, treats an effort by incoming Democrats to raise the wage as a noble proposal whose time has finally come - but which also doesn't go far enough.



That sensibility is also evident in the hurry-up-and-do-it headine: "Raising the Floor on Pay - States Leap Ahead of Congress in Acting on the Minimum Wage."


"On the verge of controlling Congress, the Democrats are making a much-delayed increase in the minimum wage their signature attempt to lift incomes and quiet widespread economic anxiety. But the party's modest proposal does not catch up with what the states have already done to raise the wages of tens of millions of workers.


"Putting a floor under wages was once the domain of the national government, a legacy of the New Deal that lasted for decades. As recently as 1984, only one state - Alaska - had a higher minimum.


"By then, however, Congress no longer regularly increased the minimum. So the states stepped into the vacuum, one after another, everywhere but in the South. In the last election alone, voters in six states approved minimums higher than the federal level, and in some states cost-of-living clauses automatically increase the minimums - a step that Congress has never taken and that most Democrats still balk at."


[...]


"Starting in the early 1980s, after Ronald Reagan was elected president, increasing the federal minimum wage by more than token amounts ran into a buzz saw of opposition. Conservative economists contended that regular increases distorted the free supply and demand for workers. Citing longstanding economic research, they said it did more harm than good, prompting employers to drop marginal workers not worth the higher minimum.


"That was still the prevailing view in the early 1990s when two labor economists, David Card, now at the University of California, Berkeley, and Alan B. Krueger at Princeton, found that modest increases in low minimum wages had no impact on employment, and in fact might reduce turnover.


"The states themselves became tests of this finding. As more of them increased their minimums without measurable effect on employment, the opposition faded. Even the chief critic of the Card-Krueger position, David Neumark, a labor economist at the University of California, Irvine, has softened his position, though he still sees little if any advantage in a higher minimum wage."


A Cato publication pointed out the weaknesses in the study Uchitelle that doesn't, including: "The Pennsylvania-New Jersey comparison has drawn the most attention. In this case the authors chose to construct and use data obtained from a 24-question telephone survey. Only one question in this survey pertained to minimum-wage employment, and it is somewhat imprecise with respect to what constitutes full-time and part-time employment. The authors are to be commended for making their data sets available (in a sanitized fashion) through e-mail, but that is not enough. The quality of their data may be critically flawed so as not to satisfy the ceteris paribus assumption."


There have been other studies, none mentioned by Uchitelle, suggesting that Card and Krueger's conclusions are wrong and that unemployment did in fact go up after state minimum wage hikes.


Uchitelle is reluctant to use the liberal label, preferring the less loaded term "populist."


"Spurred on by last month's election results, the populist wing of the Democratic Party is calling for a return to the old standard. Sherrod Brown, newly elected to the Senate from Ohio, is in that group. So is the A.F.L.-C.I.O., which says that its success in getting out the vote this fall entitles it to a bigger voice in Democratic Party policy.


But they are meeting political resistance from the moderates in the party. Trying to push the populist case, the Economic Policy Institute, a labor-oriented research center, posted a statement in late November calling for an increase in the minimum to $8 an hour in 2009 instead of the $7.25 proposed by the party leaders. That recommendation was quickly withdrawn, however, under pressure from the leadership."


Finally, the L-word is mentioned, once: "Liberal economists and policy makers are divided on this point. Mr. Alperovitz says there is no other choice but to go with the states. At the federal level, he argues, the Democrats are no longer a powerful source of progressive legislation."