A Minimum Wage Hike as Amnesty-Killer?
My Friday Aspen Institute panel in DC on raising the minimum wage went well, though the discussion underscored the somewhat insular thinking of many of the policy elites who dominate life in our capital city.
As an example, although the audience and participants skewed heavily toward the “economic left,” several individuals mentioned how surprised they were to encounter the suggestion that our federal minimum wage be raised to $12.00 per hour—my proposal—or even higher, a notion that seemed almost unimaginable within their own policy circles. Meanwhile, former Democratic Congressman and Cabinet Secretary Dan Glickman described the politics of raising the minimum wage as being extremely difficult, given the intensity of opposition he had always encountered among many small businessmen.
These two issues are not unconnected. As I pointed out in response to Glickman’s question, a small rise in the minimum wage—such as the $9.00 figure proposed by President Obama—has limited political viability since it generates little of the enthusiasm necessarily to overcome the determined opposition of its ideological or practical opponents. Only a narrow sliver of American workers would directly benefit, their net dollar gains would be relatively small, and they represent an economic stratum that overwhelmingly votes Democratic, whenever it bothers to vote at all. How would such a measure ever stand a chance of passing the Republican-controlled House?
But consider the very different politics of a $12.00 figure. Over 40% of all American wage-workers would benefit, including 40% of the white Southerners who constitute the Republican base, and the mean gains for both those groups would be over $5,000 per year. Such an enormous sum of money would capture the imagination of its potential recipients, and also that of their immediate family members. Conservative ideologues such as Rush Limbaugh would surely denounce the proposal, but many of his ditto-heads are struggling with credit-card and mortgage loans, and for an extra $5,000 per year they’d surely turn a deaf ear to his arguments or even decide to turn their radio dial. The intensity of support for such a minimum wage hike would become every bit as great as the intensity of the regular opposition cited by Glickman. Offering people serious money may get their serious attention.
A further sign that these sorts of major economic proposals are rare as unicorns among DC’s affluent, white-collar denizens came from some of the practical objections raised. Various participants and audience members wondered if a large rise in wages might not hurt America’s working classes more than it helped them, by raising the prices they paid for goods and services and cutting their government benefits. Wouldn’t McDonalds have to charge them more for hamburgers, and wouldn’t the working-poor lose access to food stamps and have their EITC checks reduced?
A moment’s thought shows that these tradeoffs are trivial. Only a small fraction of working-class dollars are spent at the sort of labor-intensive businesses whose prices would rise, and even for those companies, only a small fraction of their costs would be impacted. One panelist who had run the numbers explained that a 10% rise in the minimum wage would increase the costs and prices of such businesses by much less than one percent. And if your wages have grown by $4.00 per hour then having to pay an extra dime for the occasional Burger King Whopper is hardly a major burden.
The argument about losing government benefits is even more unrealistic. It is certainly true that our federal agencies direct billions of taxpayer dollars toward improving the lot of the working poor, and those recipients would lose eligibility once their heavier paychecks had lifted them out of poverty. But virtually all those programs are designed so that the benefits lost are be just a small fraction of the extra income achieved, resulting in large net gains. After all, if this were not the case, then surely we would read stories of workers going on strike to demand that their wages be cut so that they can qualify for bigger government handouts. Only in DC would policy experts automatically assume that more generous government programs rather than much higher wages are the best means of uplifting America’s long-suffering working class.
So if a large rise in the federal minimum wage is probably a good policy idea, what can be done to overcome the formidable political obstacles? Even as our panel was meeting in Dupont Circle, just a mile or two away the members of the House were holding a test vote on an amendment attaching a $10.10 minimum wage to a federal job training bill, and the proposal failed miserably, losing by a wide 49 vote margin without a single Republican in support. Unless dozens of Republicans can be brought on board, any hike in the minimum wage is doomed.
At this point we should revisit the obvious connection between a rise in the minimum wage, a topic long ignored in policy circles, and the current push for an immigration amnesty, which has attracted overwhelming, bipartisan support among political and media elites, and stands an excellent chance of passage, probably combined with some increases in temporary job visas and perhaps an agricultural guestworker program.
We are endlessly informed that American businesses and their influential lobbyists favor these immigration reforms because they will improve our national productivity through increased “economic efficiency.” But this is merely a euphemism for lowered wages and the greater business profits that result. There is nothing more obvious than that an increase in the number of willing workers will benefit Capital at the expense of Labor, which hardly seems necessary given that Capital has been winning all the marbles for the last forty-odd years.
Strong opposition to these immigration proposals does exist among many grassroots Republicans and conservatives, less for economic reasons than on social, cultural, and ethnic grounds. The hostile House Immigration Reform Caucus boasts some 93 members, and numerous rightwing websites and bloggers have been going all out to block the latest incarnation of a dreaded “Amnesty.” But with Democrats and liberals solidly in support despite any economic misgivings they might have and with Republican business interests riding herd on the other side of the aisle, passage of a sweeping immigration measure now seems reasonably likely unless something dramatic suddenly appears to upend the politics of the issue.
Enter Minimum Wage, Stage Left. Many dozens of hard-core House conservatives regard their opposition to immigration as a visceral life-and-death issue for their society, while their opposition to a higher minimum wage tends to be much more abstract and based on the pronouncements of the very same free market economic theorists who are suspiciously pro-immigration. Suppose some of those hardcore anti-immigration Republicans chose to attach a $12.00 minimum wage to the proposed legislation.
Suddenly, the politics would become much more complicated, with the unified elite consensus behind immigration reform beginning to fragment. Might such an amendment pass? Sincere liberals would see the clear logic of ensuring that American working wages aren’t destroyed as the collateral damage of immigration reform, and powerful unions would transfixed by the impossible dream of a $12.00 minimum wage almost at their fingertips, with the membership of heavily immigrant service unions being the most enthusiastic. The neoliberal financial and ideological interests that dominate the Democratic party might not like the proposal, but their distaste would probably not be enough to sway more than a handful of members against powerful grassroots enthusiasm. I suspect that Democratic support would be overwhelming.
Meanwhile, many conservative Republicans desperate to stop “Amnesty” would favor the proposal as a classic sort of “killer amendment,” aimed at defeating passage of the entire bill. Business interests and the Republican leadership would do their best to whip them back into line, but if even just half of the anti-immigration Republicans stood their ground, their votes might be enough to carry the day, when combined with overwhelming Democratic support. Suddenly, immigration reform and a much higher minimum wage would have become a package deal, producing much gnashing of teeth among libertarians and business lobbyists.
At this stage, my crystal ball grows murky. The practical and ideological politics of such a combined measure would be quite complex, and difficult to predict. A sharp rise in the minimum wage is enormously popular among the general public, and that would boost the legislation, but is equally disfavored by our dominant elites, whose political power is disproportionately great in our society. Certainly the editorial page of the Wall Street Journal—advocates of open borders and a zero minimum wage—would have conniptions. My guess is that the elite consensus favoring Amnesty is strong enough to allow a much higher minimum wage to hitch a ride on its back, but I might easily be mistaken.
In any event, I don’t really think the anti-immigration conservatives have much choice in the matter. The current correlation of political forces so strongly favors the looming Amnesty that they seem very likely to lose unless they stage a dramatic maneuver to split the ranks of their opponents. And attaching a $12.00 minimum wave to the planned immigration bill seems one of the best possibilities at hand. Anyway, I have previously argued that even if such a combined Amnesty/Minimum Wage were to pass, the result would be to sharply reduce the future flow of illegal immigrants, and some leading anti-immigration outlets have seconded my analysis.
Our history contains interesting examples of how such unlikely political vector-sums have created major American policies. The various federal laws barring discrimination against women are today considered among the proudest achievements of left-liberals, but from what I’ve read they were actually added to the 1964 Civil Rights Act by conservative opponents, who regarded them as “killer amendments” so ridiculous as to doom passage of the complete measure. Major legislation sometimes follows unusual ideological trajectories.
On a different matter, I’d noted in my previous column that the diligent research of Prof. Janet Mertz and her colleagues had determined that for decades roughly 95% of all top math students across almost every major country had been male. Alas, her remarkable findings lost some of their impact when she carelessly summarized her paper as indicating that men and women had very similar top-end math ability, and this backwards conclusion was the headline eventually reported by the media.
Fortunately for Mertz, rescue is at hand. My column caught the attention of La Griffe du Lion, a rightwing blogger of renowned quantitative skills, who informed me that years ago he had developed a detailed analytical model of male/female differences in math ability, and was very pleased to discover that Mertz’s international data so strongly confirmed his theoretical predictions, whose validity had previously been restricted to just the American case. The obvious solution is for Griffe and Mertz to collaborate on a new paper combining their individual theoretical and empirical research in math-gender differences, which would surely generate headlines around the world.