election 2006

One of the ironies of the federal midterm elections just concluded is that the Republicans not only lost both the House and Senate but they gave the Democrats a clear, plain and popular issue which will enable the D's to look united once the new Congress begins in January 2007. That issue is the raising of the federal minimum wage. The way the minimum wage works is that each state's MW cannot fall below the floor established by Congress, but it can go above it. Projected House Speaker Nancy Pelosi's home state of CA has a minimum wage that is at least 40% higher than the federal wage; thus the argument of the D's will be when Congress convenes that the higher minimum wage does not and will not endanger the creation of jobs. They will also argue that it is a matter of simple justice that millions of people who are trying to eke out an existence in America should not be required to do so on $5.15 an hour. This essay probes that issue in more depth.

The Republican Economic Agenda

The economic agenda of the first six years of the Bush Presidency has emphasized income tax cuts which favor the rich rather than the middle class or poor, the reduction in capital gains taxes (ditto), and proposals (yet unapproved) gradually to eliminate the estate tax (which affects less than 1% of Americans--guess who?). In the time when the President has been so concerned to give money back to the richest Americans, the federal minimum wage, which about 26 states still use for their own minimum wage, has stayed stagnant at $5.15 per hour. However, in the midterm elections just past, almost half of the 26 states will raise their MW considerably. Here is a summary article on that. Thus, the raising of the federal minimum wage, perhaps to $7.25 per hour, will be a symbolic issue in lots of ways, though it will bring some actual relief for families with low income earners.

Let's just run the numbers so that you can see what has happened on the MW front. The last Democratic-controlled congress raised the federal MW, effective Jan. 1, 1994, to $4.90 per hour. Then, on Sept. 1, 1997 it went up to the current $5.15 per hour. To be noted is that one of the states with the highest current MW's, Washington, followed the federal MW of $5.15 in 1997 but then severed its ties with the fed by providing the following increases:

1/1/99 $5.70
1/1/00 $6.50
1/1/01 $6.72
1/1/02 $6.90
1/1/03 $7.01
1/1/04 $7.16
1/1/05 $7.35
1/1/06 $7.63
1/1/07 $7.93, with future increases linked to inflation.

Thus, while the federal minimum wage remained stuck, WA and about 20 other states decided on various ways to raise it. Some "hot" cities, such as Santa Fe, NM, or San Francisco and Los Angeles, CA, have minimum wages (called "living wages"--see below) as high as $10.00 per hour, but these are exceptions.

Why the Issue is a Winner for the Democrats in Congress

Republicans have often opposed increases in the minimum wage because it would, they argue, cause businesses to hire fewer people and thus lead to higher unemployment figues. You can expect this mantra will be trotted out again early in 2007. But I think the R's have lost both the economic and moral high ground on the issue. They have lost the economic argument because most states have increased minimum wages at the same time that the overall jobless rate is declining. They have lost the moral high ground because it will be hard to argue with a straight face that after giving loads of breaks and benefits to the richest people you are now opposing small increases to the poorest people. By opposing an increase to the federal minimum wage at this point will make the Republicans look like greedy people who lack compassion for millions of their fellow Americans.

But the issue will be a winner for the D's for another reason. Once they see how comparatively easy it will be to pass a minimum wage increase (and President Bush, in my estimate, will not dare veto it), many of them will start rumbling for a "living wage" approach to paying the American people. The "living wage" movement argues that the MW for a person supporting a family of four ought to exceed the annual federal poverty guidelines for that year. Here is a chart that helps explain how it works. For example, a living wage for a person working 50 weeks at 40 hours per week (with two weeks unpaid leave) was $9.20 per hour in 2003 for a family of four. It would be much higher today. The point is that a higher federal minimum wage would embolden the proponents of a living wage (enacted in more than 70 localities nationwide) to push for this recognition more broadly. And, they will probably find increased receptivity around the country for the idea.

Conclusion

Had the Republicans passed a MW increase between 2001 and 2006, they would have taken away a potent issue from the D's. But they were otherwise preoccupied. As a result they have given the D's a running start heading into 2007. Whether the D's will be able to retain momentum is, of course, another story. But they will begin with some in January.

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