Minimum wage increase stalls in Washington

The idea of raising the rate at all has been killed by the opposition of senior Republicans and a crowded legislative agenda.

By MSN Money Partner Jun 26, 2013 8:45AM

A Walmart employee gathers pushcarts at a Walmart store in Paramount, Calif. (© Frederic J. Brown/AFP/Getty Images)QuartzBy Tim Fernholz


It took the Great Depression to break business opposition to a federal minimum wage, but 75 years since Franklin D. Roosevelt signed it into law, even capitalists are starting to pine for a higher minimum wage in the United States. But the country is no closer to seeing an increase from the current $7.25 per hour.


The case for raising the wage floor argued by venture capitalist Nick Hanauer and abetted by Reuters columnist Felix Salmon, is straightforward: More purchasing power for consumers would help stimulate the slow-moving US economy and fill public coffers. It would also strike a blow against income inequality. Adjusted for inflation, the minimum wage peaked in 1968, at $10.25 in today's dollars, and the annual income of $15,080 guaranteed today still leaves a household of two below the poverty line.


This spring, President Barack Obama proposed to raise the minimum wage to $9 an hour by 2015; Democrats in Congress have written legislation that would take it to $10.10 in the same period. (Hanauer would prefer $15.) But the idea of raising the minimum wage at all has died in Congress, killed by the opposition of senior Republicans and a crowded legislative agenda dominated by immigration reform and investigations. Obama's White House has done little to lobby for the policy, with a planned speech by the vice president to mark today's anniversary demonstrating the proposal's second-fiddle status within the administration.


Economic cases against raising the minimum wage tend to vary: Some economists say that a higher minimum wage causes unemployment among low-skilled workers, if businesses can't afford the new labor costs, while other studies say there are no discernible effects on employment. Perhaps the most sophisticated approach (.pdf) is to consider the minimum wage as a complement to other anti-inequality programs like the earned income tax credit.


Still, the last time the minimum wage was increased, in 2007, Republican President George W. Bush signed the bill. That suggests a bipartisan solution could be found, and offers a hint as to how.


Republicans now support some version of immigration reform because their party is having trouble attracting Hispanics and is seen as the party of the super-rich. Immigration reform could help address that perception, and so could raising the minimum wage. In fact, those Republicans concerned that immigration reform will temporarily lower the wages of un-skilled workers might find a higher minimum wage is a straight-forward fix.


It's hard to think of a better law for Republicans to burnish their populist credibility before they spend the fall hammering on for lower taxes and less spending.


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Jun 27, 2013 6:57AM
How about they raise the wage and take away food stamps/phones/welfare for anyone with a pulse?  SS disability abuse as well.
Jun 27, 2013 7:57AM
Hopefully it stays stalled. Obo is trying to raise the amount of money the government can steal from workers.
Jun 27, 2013 8:48AM
This is manipulative politics at its best.  There is and never was a true intention of raising the minimum wage.  This is mean to give poor working folks this false hope.  The guberment would call in the national guard before any increase.  The politics of this facade is totally mean.  Saying or suggesting this when there is an absolute total non intent to ever follow through.  America has to toughen up and understand what is being done to our citizens.
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