February 24, 2014

FORKEN | Why Republicans Shouldn’t Fight Minimum Wage

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Earlier this month, the Congressional Budget Office, a nonpartisan federal agency, released a report titled, “The Effects of a Minimum-Wage Increase on Employment and Family Income.” First, the good news: A 39 percent increase in the federal minimum wage from $7.25 to $10.10 would lift 900,000 families out of poverty while simultaneously increasing the incomes of 16.5 million low-wage workers. The CBO also determined that an increase in the minimum wage would lead to the reduction of 500,000 jobs. Predictably, the Obama administration touted the reduction in income inequality while Republicans pointed to the ensuing job loss. However, the Republicans would be smart not to fight the Democrats on the minimum wage for two reasons: The first being that the CBO report was, in reality, largely inconclusive, and the second being public opinion.

As mentioned before, one of the main talking points of the Republican base is that increasing the minimum wage will ultimately force firms to reduce employment. Nevertheless, even if you take the CBO report at face value, these 500,000 lost jobs only translate into a 0.3 percent reduction in the labor force. There are many reasons not to see the CBO report as the be-all and end-all in the minimum wage debate, including numerous conflicting reports from other labor economists, such as Lawrence Katz of Harvard, who claim that the CBO overestimated the policy’s effect on the labor market.

Furthermore, consider this direct quote from the CBO report, “Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3 percent, CBO projects … As with any such estimates, however, the actual losses could be smaller or larger; in CBO’s assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduction in employment of [one] million workers.”

The uncertainty in the report indicates that the minimum wage may decrease total employment by negligible amounts or around 0.3 percent at the most. Adding to the ambiguity of the report are the conclusions from the CBO on increasing the minimum wage to $9.00, which the organization also considered in the report. The findings on this increase were that the effects could range from a very slight increase in employment to a very slight decrease in employment. Essentially, the CBO report verifies that predicting how the labor market will react to an increased minimum wage amounts to a shot in the dark.

Put simply, the Republicans have nothing to gain from resisting a wage increase. The effects are so uncertain that neither party really has ground to stand on. That being said, the Democrats have the upper hand due simply to public opinion. According to a Quinnipiac poll from January, 72 percent of voters favor an increase in the minimum wage to $9. Additionally, 52 percent of Republican voters favor the proposal.

The Republican base has to realize that voters do not care about CBO reports. They care about putting more money in their pockets. It is true, although not certain, that some may lose their jobs because of a minimum wage increase. However, as Jared Bernstein, a former White House economic advisor, commented, “Even if they’re [the CBO] right, the beneficiaries far, far outweigh the people who are hurt by this.”

To their credit, the Republicans managed to follow public opinion and approve a clean debt limit earlier in the year. That may prove to be for naught if the GOP cannot follow the will of the voters continuing into the 2014 midterms and 2016. From a political standpoint, it seems nonsensical for the Republicans to oppose the Democrats on minimum wage. While their policy beliefs may tell them one thing, the GOP would be smart to give up the minimum wage fight in the spirit of winning elections. As the economics do not universally support either party’s stance, public opinion should dictate the views of policymakers. While the Republican base can gain nothing from preventing an increase in the minimum wage, as their own constituency even supports the idea, they can further the rebranding of their image away from the “Party of No,” by saying yes to what Americans support.

Jake Forken is a sophomore in the College of Human Ecology. He may be reached at [email protected]. My Forken Opinion appears alternate Tuesdays this semester.