How Obamacare backlash could boost the minimum wage

Among the ballot questions before voters next week is a minimum-wage hike in New Jersey. The Washington Post’s Niraj Choksi reports:

On Tuesday, voters there are expected to overwhelmingly pass an amendment to the state constitution that raises the minimum wage by a dollar, to $8.25, and sets it to increase automatically with inflation. If passed, it would make New Jersey the fifth state to include the minimum wage in its constitution and the 11th to adopt automatic increases, according to the National Conference of State Legislatures.

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Two recent polls show the measure getting more than 60 percent of the vote, which is probably enough of a cushion even if undecided voters break for the “no” side. Republican Gov. Chris Christie, expected to romp to re-election on Tuesday, is against the measure (“I will oppose amending our constitution, that is just a stupid way to do it, that is not what the constitution is there for,” he said in September), as is the state Chamber of Commerce and other business groups.

Think Progress’s Bryce Covert contrasts changes to the minimum wage at the state level with the federal minimum wage, which has been stuck at $7.25 for four years and would be $10.40 an hour if it had kept pace with inflation since 1968. He argues that, contrary to the claims of many business groups, an increase would boost the American economy. (“A study from the Chicago Federal Reserve found that raising it to $9 an hour would increase household spending by about $48 billion.”)

But aside from economic stimulus and a simple desire to reduce income inequality, proponents of a higher minimum wage may have a new argument: It could reduce government spending. See the Catholic News Service’s “Cheap Fast Food?”:

According to a study released on Oct. 22 by the University of California’s Berkeley Labor Center and the University of Illinois, more than half the nation’s fast food workers rely on public aid because their wages are not sufficient to support them. Fifty-two percent of families of fast food workers receive assistance from public programs like Medicaid, food stamps, the Earned Income Tax Credit and Temporary Assistance for Needy Families, the report said, at an estimated cost to taxpayers of $7 billion each year.

The Guardian’s Sadhbh Walshe writes, “hugely profitable corporations like McDonald's are only too happy to rely on the American taxpayer to subsidize the non-living wages they pay their workers” and she wonders why conservatives don’t get outraged by this:

Perhaps I'm being unreasonable, but it seems to me that when Republicans are so vocal about how much they hate government programs like SNAP benefits (aka food stamps) and Medicaid and indeed anything that makes life a little more feasible for low-income or no-income Americans, they should surely be able to work up a small sweat at such a blatant example of the system being gamed. Just last month congressional Republicans voted unanimously to cut $39bn from the food stamp program, and I surely don't have to waste words here outlining their opposition to any form of government subsidized healthcare. Why then, when they have made their objection to welfare programs abundantly clear are they seemingly okay with hugely profitable corporations exploiting these programs while they underpay their workers?

Forbes’s Adam Ozinek gives her an answer:

Conservatives believe that minimum wages lead to more unemployment, and people on unemployment are going to rely on more not less public assistance. Maybe you don’t believe this but the conservatives you’re purportedly trying to convince do. So if you’re going to try to sell them on an argument that a higher minimum wage will lead to less food stamps you’re wasting your time. You may succeed is raising their ire more about food stamps, but you’re simply not going to sell them on a minimum wage with these arguments. My guess is those who write or cheer pieces like this are simply too cloistered in their own ideological bubbles to understand that.

Kevin Drum, who linked to both of the above pieces, has an even simpler explanation: “The truth is that [conservatives] simply oppose business regulations, and the minimum wage is a business regulation.”

New Jersey voters don’t seem as hostile to the idea. And with Washington in gridlock, success in New Jersey may prompt minimum wage boosters to seek action at the state level. Drum points out that minimum wage hikes could raise fast-food prices, which would disproportionately affect low-income families. But that won’t matter much to the relatively high-income, highly educated voters who may like the minimum wage more than they like Food Stamps and other government assistance programs. Stories about the chaos in the implementation of Obamacare may, in fact, make it more popular to help low-income families through higher wages rather than through safety-net programs. If suburban Chris Christie voters feel this way, Republican legislators in other states may be forced to follow.

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J Cosgrove
4 years 1 month ago
The proof will be in the pudding. But why stop at $8.25 or $10.40? I believe many in NYC were hoping for $15.00 per hour? Why not $20 per hour? What is the magic number? My guess is that ordering in fast food restaurants will go to a Kiosk as is does in many convenience stores and the back will also get more automated. That will reduce the need for people to take and process an order. The reaction to higher wages is often automation. I have used a bank teller about 1-2 times a year as the ATM's provide money, take checks, make transfers between accounts. The last time I used a teller was to get smaller bills from the $50 bill that the ATM dispensed. The other traditional argument is that these jobs are not meant as long term jobs. They are starter jobs for young people to get work experience and to earn some extra money. They are not meant as careers but some do lead to better jobs within an organization especially retailing. But the real push for increasing the minimum wage is from the unions as they use the increase to demand higher wages for the union members. One of the reasons we have supposedly had low inflation in recent years is the lack of wage inflation holding down overall inflation. If we get wage inflation, this will put pressure on borrowing and that would send government spending spiraling and our minuscule interest payments on our debt would increase dramatically. Compassion has unintended costs. Maybe some should recall the 1970's. The saving grace is that union jobs are much smaller in number than the 1970's. I love the spin of Mr. Sullivan. It is interesting to see how he frames the articles but it is kind of hard to repeal the laws of nature.
Joseph Kash
4 years 1 month ago
It is interesting the the Unions are the biggest lobby for higher minimum wage even though the union salaries are much higher than minimum wage. Why is this? Are the Unions altruistic, fighting for the little guy? Or is there personal interest for their members? Maybe if you increase the cost of low skilled labor this will protect more union jobs? In South Africa the white unions faught for higher minimum wage for low skilled black labor. Why? Was white South African Labor against apartheid? Or was it that low skilled black labor was undercutting the white Union labor? The real problem is that low skilled labor is hurt by minimum wage laws. This is disproportionately true for low skilled young African American men.

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