SharedThought

In a recent post I took Congressional Republican’s to task for their defeat of an effort to increase the minimum wage. I received a comment from John Rogers, author of The Therapy Sessions that led to a bit of a dialog on the minimum wage. You can see his post on his website here. The main thrust of The Therapy Session’s argument against the minimum wage appears to be that by creating an artificial floor on salaries there is an upward pressure on all wages, and that this is bad. I guess we can just agree to disagree about this point. I personally don’t have a problem with increasing the wages of somebody at the bottom of the economic ladder, even if that leads to an upward pressure on all wages. In fact I think an increase in wage-earned income might actually be a good thing for the economy. I’ve had enough of the Republican Party’s emphasis on trickle-down economics and their favoritism of passive income over wage income (i.e., capital gains tax cuts, estate tax cuts, dividend tax cuts). How about calling an increase in the minimum wage trickle-up economics, then? James Surowiecki, a much brighter fellow than I, reaches essentially the same conclusion in a Slate piece from 1998 on the minimum wage.

Therapy Sessions had a particular problem with my idea of adjusting the national minimum wage to account for inflation. This is the same approach taken for Social Security benefits and Federal government wages, which have a greater overall economic effect than minimum wage income. For example, this year, nearly 47 million Americans will receive approximately $470 billion in Social Security benefits, and in 2002 Federal government wages were $199 billion. Conversely, the annual amount paid to minimum wage workers appears to be a good deal less than $125 billion (this is a rough estimation based on 11.9 million workers each working 40 hours at $5.15 per hour for 52 weeks). Thus, the inflationary effect on the national economy of raising the minimum wage would likely be slight. In addition, a number of states have seen the fairness of this approach and index their minimum wages to inflation — including the liberal bastion of Alaska!

The Minimum Wage Redux by SharedThought, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License.

This entry was posted on Wednesday, July 23rd, 2003 at 4:02 pm and is filed under Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.