Reading Liberally Page Turner: Living With the Minimum Wage

by: Living Liberally

Tue Jul 24, 2007 at 11:36

Today, the minimum wage goes up for the first time in a decade.  As liberals, we're by our very nature concerned with what it means to live in a just and equitable society. As a Drinking Liberally host who has spent the last few days preparing to host a discussion with Jared Bernstein on his book All Together Now: Common Sense for a Fair Economy, I think Bernstein (of the Economic Policy Institute) largely hits the nail on the head on this point, and I'd like to discuss that here.

We're living in historical times, perhaps unprecedented in my lifetime. We're engaged in a terrible and unnecessary war in Iraq, the Executive Branch has evidently become severely politicized, and the compact that holds our society together economically has eroded.

I'd like to focus on that last point. There appears to be little dispute that a new social compact is needed. President Clinton used just those terms when he said, in a 1995 speech (Washington Post):

"We must forge a new social compact to meet the challenges of the time." That compact, an updated version of his 1992 "new covenant" campaign theme, must be grounded, he said, in the tenets that "opportunity and responsibility . . . go hand in hand; we can't have one without the other, and our national community can't hold together without both."

The real debate is over what form it should take. On one hand there are those, myself included, who believe that living in a just and equitable society means that workers cannot be exploited for their labor. They can't live in a state of fear of being without health insurance. They can't live knowing that their children will be unable to lead a better life because of the costs of education. They need to know that social security will be there for them when it's time to retire.

The other principle view is that the implicit social compact includes none of these things. You're On Your Own. It's from this that Jared Bernstein cobbles together the acronym YOYO. For the view that risks are better assumed by society as a whole than by the individual he uses the acronym WITT for We're In This Together.

How do the YOYO's feel about the minimum wage? As Jon Stewart likes to say: "Not so much." The strategy that the YOYO's used was to abolish this part of the social compact by refusing to raise the minimum wage, and thus erode its meaning (All Together Now, pages 91-92):

Higher minimum wages are one of the most direct ways to diminish the wage gap between the lowest earners and the rest of the workforce, and it's especially effective for low-wage women workers. But if Congress fails to raise the minimum wage periodically, inflation erodes its value. And in fact, thanks to YOYO inaction on this- Reagan ignored the minimum wage for nine years, and the current Congress and administration are following suit, not raising the minimum wage since 1997- the buying power of the minimum wage is close to its lowest level in half a century. Had Congress raised it to keep pace with inflation, it would have been around $7.50 in 2005 instead of $5.15, which would have meant almost $5,000 more a year for a full-year worker. That's a huge boost for those living on the edge.

While we may tend to think of this as a difference in philosophies between the Republicans and Democrats, polling indicates this isn't the case. The minimum wage is popular cross-party (All Together Now, pages 97-98):

Here's an enlightening, though unfortunately rare, example of a YOYO attack that brought together people and their political representatives from all walks of life in opposition. For years, YOYO's have been gunning for the Fair Labor Standards Act, the 1938 legislation that embodies many solid WITT principles, including the minimum wage. The act grew out of the realization that sometimes the job market is so much a "buyer's market" (that is, too many people are chasing too few jobs) that the worker's bargaining power is diminished to the point where they can be exploited. We've discussed the current opposition to increasing the minimum wage. But in 1938, Congress decided that when market forces pushed the wages of the lowest-paid worker to privation levels, it was time to overrule the market by imposing a floor below which it was socially unacceptable for wages to fall.

It was a clear rejection of YOYO economics and, as the Florida and Nevada cases show, a great example of a WITT economic policy that crosses party lines. Support for the minimum wage is typically high, as such things go, with moderate increases usually getting well upwards of 80 percent approval for raising the minimum from its current level of %5.15 to $6.45, which in polling land means that pretty much everyone agrees. For self-described liberals, support is at 94 percent (no surprise there), but for "social conservatives" it is 79 percent, a resounding majority.

The increase in the minimum wage beginning today is a good first step. Many would argue that the social compact needs to go beyond this. In a just and equitable society those who work full time should be able to afford a place to live. In this landmark NYT article, describing the birth of the Living Wage movement, we see this wasn't true in Baltimore in 1995. That was the same year that President Clinton was describing the new social compact: (NYT Magazine)

Workers in some of Baltimore's homeless shelters and soup kitchens had noticed something new and troubling about many of the visitors coming in for meals and shelter: they happened to have full-time jobs. In response, local religious leaders successfully persuaded the City Council to raise the base pay for city contract workers to $6.10 an hour from $4.25, the federal minimum at the time. The Baltimore campaign was ostensibly about money. But to those who thought about it more deeply, it was about the force of particular moral propositions: first, that work should be rewarded, and second, that no one who works full time should have to live in poverty.

Finally, I want to invite you to Jared Bernstein's discussion at the DC chapter of Drinking Liberally. He'll be discussing and signing All Together Now (thanks to Olssons Books for selling copies at the event). It's an opportunity to discuss one of the most important issues for the upcoming 2008 elections in an informal environment. More details here. We hope you'll stop by.