| As can be seen in the following set of charts, mapping the party systems in terms of control of the House, Senate and Presidency, the most common pattern in that one party starts off dominant, and is challenged only after 3 terms (six congresses), with the dominant party usually controlling all three branches 9-13 congresses out of 15-18. The First Party system was anomalous, because it coalesced gradually out of an informal system, and the defining realignment election did not occur until the fourth election (the so-called "Revolution of 1800"). Still, the pattern of numerical domination held. However, the current system saw a complete break, with neither party dominating all three branches more than a few times. This was enough, however, to greatly slow Democratic initiatives on behalf of the great mass of people the party had drawn to itself since 1932, and the stagnation of the minimum wage was a prime example of this.
The American Dream in Reverse
The report, "A Just Minimum Wage" notes:
The year 1968 is so long ago that most Americans living today were not even born yet. The costs of housing, health care and higher education have all risen dramatically since then. College tuition (public or private), for example, costs more than twice what it did in 1968, adjusting for inflation.3 But the minimum wage has 43 percent less buying power than it had in 1968-and that buying power keeps shrinking as the minimum wage goes without a raise.
The cost of health insurance has risen so much that family coverage now costs more than the entire annual income of a full-time worker at minimum wage.
• In 1991, family health coverage cost one-fourth of the yearly income of a minimum wage worker.
• In 1998, it took about half the yearly minimum wage.
• By 2005, family health coverage cost $10,880, and a full-time minimum wage was just $10,712.4
Dr. Martin Luther King did not dream that in the year 2005, the minimum wage would not have the buying power of 1950. He did not dream that in this new millennium we would be debating whether to "raise" the minimum wage to the level employers paid in the 1960s.
We are living the American Dream in reverse.
Left Behind
"A Just Minimum Wage" goes on to point out that the change in the minimum wage trajectory is quite divorced from the direction of the economy as a whole. This can be seen in the following two charts. First, a comparison of growth in productivity vs. the minimum wage, pre- and post-1973. (For the most part, social movements and gains that had been made during the 1960s continued having positive impacts well into the 1970s, with the 1973/74 recession being the first major barrier to further progress. Nixon was generally quite content to go along with Democratic domestic programs as a means to secure broad support for what he really cared about, which was the consolidation of power, generally, and it's specific application in foreign affairs, and in fighting his perceived domestic enemies.)
Next is a figure showing how wages have fared since 1968 compared to corporate profits. Retail profits are particularly significant since they represent a very large, and growing segment of the minimum- and near-minimum-wage job market.
Support For Change
It's worth noting that support for increasing the minimum wage is very widespread:
In 2004, voters in Florida and Nevada approved ballot measures to raise their state minimum wage. "The minimum wage measures won in every county in both states. In conservative Escambia and Santa Rosa counties in the Florida Panhandle, where military bases and retired military veterans dominate the political culture, more than two-thirds of voters supported the wage boost, about the same margins they gave Bush. In Nevada's richest county, Douglas, near the Lake Tahoe resort area, where Bush garnered 63.5 percent of the vote, 61.5 percent of voters supported raising the minimum wage."
--Peter Dreier and Kelly Candaele, "A Moral Minimum Wage," The Nation, December 20, 2004.
The fact that the Kerry campaign failed to associate itself closely with these statewide initiatives surely didn't help his chances in 2004. The right is extremely strategic in running socially divisive initiative campaigns to energize their base and polarize those in the middle. But here was a no-brainer opportunity for the Democrats to capitalize on an initiative strongly favoring their position, and very little was done to capitalize on it.
Raising the Minumum Wage Works
Of course, market fundamentalists argue that the minimum wage is one of those defective socialist mandates that Cass Sunstein just loves to hate. Higher minimum wages mean less jobs, they argue, using their one-size-fits-all Economics 101 models. Well, in his 1996 book, Everything for Sale: The Virtues and Limits of Markets, Robert Kuttner used behavioral economics as one of his tools to help understand why this is a load of crap. Labor markets aren't like other markets, he concluded, and a wealth of research since then backs up the arguments he made then. Low wage workers tend to spend everything they make, so they pump more money into the local economy. Increased wage rates make it more costly to lose experienced workers and spend time training new ones, so turnover rates tend to decline. And higher wage rates make it more important to look for ways to raise productivity--either through buying new equipment, investing in more training, or finding ways to work smarter. These are all factors that simplistic models routinely fail to account for, but that end up having major impacts in the real world.
As "A Just Minimum Wage" reports:
More Jobs, Less Poverty After Last Minimum Wage Hikes
The minimum wage was last raised in two steps: increasing from $4.25 to $4.75 an hour in October 1996 and then to $5.15 in September 1997. In the words of a 2000 report by the Clinton administration's National Economic Council, "Since the 1996-97 increase in the minimum wage, the American economy-and labor markets in particular-have continued to perform very strongly. Between September 1996 and February 2000, 10.2 million jobs were created... even stronger growth than in the previous 2 years. In retail trade, which has a large concentration of minimum wage workers, there were 1.4 million new jobs."49
Contrary to what minimum wage critics predicted, unemployment went down across the board across the country-including among people of color, teenagers, high school graduates with no college, and those with less than a high school education. As the Department of Labor Monthly Labor Review summed it up, 2000 ended with the overall unemployment rate at 4 percent, the lowest rate since 1969. "Every census region and geographic division attained its lowest quarterly unemployment rate on record in 2000." Looking more closely at fourth quarter 2000, the teenage unemployment rate of 12.9 percent was the lowest since 1969. "The unemployment rates for Hispanics (5.6 percent) and blacks (7.5 percent) declined to record lows in 2000, whereas the rate for whites (3.5 percent) was unchanged from the prior year's 3-decade low."50
The higher minimum wage reduced poverty, including among teenagers and high school dropouts-two demographic groups that opponents asserted would be disproportionately harmed by such an increase.51
In short, between 1996 and 2000, the economy had unusually high growth, low inflation, low unemployment and declining poverty rates-until the Federal Reserve purposefully slowed economic growth by repeatedly raising interest rates during 1999 and 2000. The economy broke the record for the longest expansion in U.S. history in February 2000. (The economic expansion officially lasted ten years from March 1991 until March 2001, although the stock market bubble burst in March 2000.)
But there's even more:
"New research on the minimum wage has swayed a substantial part of the economics profession over the past decade towards support for a higher minimum wage," the Keystone Research Center observes.53 In 2004, 562 economists, including four Nobel Prize winners in economics, endorsed a statement in support of raising the minimum wage. "The minimum wage has been an important part of our nation's economy for 65 years," the economists said. "It is based on the principle of valuing work by establishing an hourly wage floor beneath which employers cannot pay their workers... The minimum wage is also an important tool in fighting poverty."54
And there's further support in state-level data:
Job Trends Better in States with Higher Minimums
A growing number of states have raised their state minimum wages above the federal level. Oregon has the second-highest state minimum (see table below). Dan Gardner, commissioner of Oregon's Bureau of Labor and Industries, says, "Overall most low-wage workers pump every dollar of their paychecks directly into the local economy by spending their money in their neighborhood stores, local pharmacies, and corner markets. When the minimum wage increases, local economies benefit from the increased purchasing power."55
States with higher minimum wages have shown stronger employment trends than the other states, including for retail businesses and small businesses (discussed in the next chapter). The Fiscal Policy Institute looked at the 11 states-Alaska, California, Connecticut, Delaware, Hawaii, Maine, Massachusetts, Oregon, Rhode Island, Vermont, Washington-and the District of Columbia (DC) that had higher wages than the federal level by 2004. The Institute reports:
• Total employment in the states with a higher minimum wage increased by 6.2 percent from January 1998 to January 2004, 50 percent greater than the combined job growth of 4.1 percent for states where the federal minimum wage prevailed.
• Retail employment grew by 6.1 percent in the states with higher minimums versus 1.9 percent in the other states.56
Oregon has the second-highest minimum wage after the state of Washington. The Oregon Center for Public Policy analyzed employment in the restaurant and agricultural sectors, which have large numbers of minimum wage workers. The Center found that contrary to predictions of job losses, "Oregon's restaurants and farms have been adding jobs more rapidly than employers generally since Oregon voters raised the minimum wage and established annual cost of living adjustments."57
At this writing, 17 states and the District of Columbia (DC) have state minimum wage rates set higher than the federal minimum wage.
The Limits of Individual Effort
Finally, one of the most powerful narratives we are working against is the individualist narrative that says people are to blame for their own poverty. This is an argument that can seem to make sense on the individual level. All things being equal, it makes sense that someone who works harder will do better economically. But, of course, all things are rarely, if ever equal. And one thing that no worker has control over is the state of the overall economy, including the sorts of jobs that are available.
In contrast to the myth, there is a two-fold reality: first, that even those with more education are falling behind, and second, that most job growth is coming in fields that don't require much education. Both these factors significantly limit how much an individual can do to improve their economic status through education--and that's not even considering the fact that education is more costly then ever before:
We often hear that increased pay inequality is due to the economy's demand for a more educated, more skilled workforce. The reality is that workers are more educated than past generations, but pay is falling behind. The reality is that high-tech workers are losing ground as well.42 The reality is that most of the 20 occupations expected to produce the most jobs in the future don't require higher education and don't pay high wages. (See Table 2.1.)
The largest number of workers paid at or below minimum wage come from retail trade, leisure and hospitality, and education and health services. The occupations with the largest percentage of workers paid at or below minimum wage are:
• Food preparation and serving related occupations-19 percent at or below $5.15 and 66 percent under $8.50 in 2004.
• Personal care and service occupations-6.7 percent at or under $5.15 and 48 percent under $8.50.
• Farming, fishery and forestry occupations-3.5 percent at or under $5.15 and 56 percent under $8.50.43
Most of those occupations are among the occupations projected by the Bureau of Labor Statistics to produce the largest job growth between 2002 and 2012. Only 5 out of the 20 top job producers (see table below) have median hourly pay that is higher than the overall median hourly wage of $13.84 for 2004. The rest are lower. Seven of the 20 occupations pay at or below $9.04, about the value of the minimum wage of 1968, adjusting for inflation.
Conclusion
All the above points to a tremendous need to restore equity and hope for tens of millions of Americans. And with that need comes political opportunity as well. An activist government that makes a positive difference in people's lives is what lies at the very core of the liberal political vision. Government doesn't do everything for us, but it does for us what we cannot do alone. And raising the floor for all of us is just that kind of thing.
The minimum wage is like many other kinds of minimal inclusionary practices that a liberal government promises--such as the inalienable rights guaranteed in our Constitution, but also the sorts of opportunity that markets alone cannot always provide--such as rural electrification in the 1930s, and universal broadband today. Raising the floor for all does not eliminate differences based on hard work, education and sacrifice. It simply removes a level of deprivation that the vast majority of people experience through no fault of their own. Raising the minimum wage to the level of a living wage should be a cornerstone of what Democrats commit to in the coming Congress. It should be a key part of the foundations on which a new New Deal is built. |
