Sen. Hillary Clinton just introduced the Standing with Minimum Wage Earners Act of 2006, which would tie percentage increases of the federal minimum wage to Congressional pay raises. The immediate effect would be to raise the minimum wage over $2 to $7.25/hr.
Not being an economist, I wonder: if passed (which I really don’t expect) what effect would it have on the American economy? Would it make a difference to anyone actually making the minimum wage?
Sure it would: it would increase their wages.
The question of what other, more indirect, effects it might have on the economy or on minimum wage workers is more complicated. We’ve had a lot of threads discussing it that I don’t quite have time or energy to hunt for now. But AFAIK, actual studies of the issue (mostly involving state minimum wages, which tend to provide more frequent data and a more manageable study size) have failed to turn up solid evidence for serious negative impacts on the economy or on employment rates from small increases in minimum wage levels.
Note that adjective “small”, though. I support raising the federal minimum wage, and I support some other attempts to legislate even higher wage floors (the so-called “living wage”) in certain more restricted circumstances. But even I see some potential problems with raising the federal MW all at once from $5.15/hour to $7.25. Usually, the more drastically you alter wage floors at a single move (whether by federal regulation or by collective bargaining or whatever), the ouchier the economic effects tend to be.
If Sen. Clinton thinks the economy and employment levels are currently robust enough to tolerate a $2.10 jump in the federal MW, okey-doke, but I’d like to see a cite.
Tying MW increases to Congressional pay raises is good political theater and is also defensible on fairness grounds, but I’m not sure it makes the most sense pragmatically.
Someone didn’t read the link.
Anyways, the minimum wage is very low compared to wages in the economy, and compared to historic minimum wages. Raising the minimum wage 2 dollars in two years most likely wouldn’t have a measureable effect on the economy. The amount of workers making minimum, or near-minimum wage is small.
Who makes minimum wage anymore? The burger flippers down at McD’s start at $7/hr, according to their “now hiring” sign, and the unskilled, (and some undocumented) day laborers from the city-sponsored day labor center used to start at $8/hr five years ago (haven’t checked the rates lately). This is a pretty safe “incumbancy protection act.” It takes heat off of incumbents who everyone seems to say need to go.
Plus, the cynic in me knows that congressional pay will be untied from COLAs, and that every two years, HB 1 (early enough that voters will forget about it before the next election) will be a bill increasing some non-“pay” benefit for congress (effective with the next Congress, per the 27th amendment).
While attaching minimum wage to Congressional pay may seem like an incisive and poetic way of pointing out how poor the poor are compared to the people running the country, it’s not practical. Congress could simply stop raising its own pay and presto! no rise in the minimum wage. Few members of Congress are financially dependant on their official salary.
A more practical approach would be to adjust minimum wage based on inflation each year.
I think it would be detrimental in the long run. This would make it less likely for congress to give itself raises, which would over time make them even more dependent on other commercial interests for their well being. It would increase corruption.
I think we should move in the opposite direction: pay them lavishly, pay them for life (even after they’ve left office), and ban them from receiving compensation of any kind from the private sector during or after their terms.
University unskilled part time employees make a dime over minimum wage around here. McDonalds’ employees start around $6, as far as I know. People do, most definitely, make minimum wage.
IIRC the pay of many employees in the federal government is limited by the amount Congresscritters get paid. So Congress refusing to give itself a raise would have fairly severe long term effects on the governments ability to hire and retain quality personnel. Of course, some might argue that this would be an advantage of freezing congressional pay.
Who? Even people who advocate smaller government don’t want whatever government there is to be staffed by incompetents.
The OP was poorly phrased, and Clinton supports no such thing. The proposed raised is spread over two years.
I agree that despite alarmist claims to the contrary, hikes to the MW have not seemed to do the economy any harm. And, of course, it does help those earning MW or only a tad over.
No good. Then we’d have their wives, sons, and nephews getting jobs as “consultants” at Company X. That being, of course, totally unrelated to Senator Shitbag’s voting to give Company X that big lump of money.
-Joe
Here is a Link (from 2004 Dept of Labor) which breaks it down.
Fun graphs and charts!
Would be interesting to see how 2006 data compares. At least from my view, the job market has exploded over those 2 years and with growth comes the law of supply & demand. They may still be able to pay minimum in the boonies somewhere, but in major metro areas if an employer wants any type of shot at a dependable entry level employee they better be paying at least $9.00
Besides, those low paying jobs can be done by illegal immigrants.
Which you’ll get more of.
It’s called a black market, and it’s what happens whenever the government decides to muck with the market system and artificially elevate prices or reduce supply.
We’ve had job booms before, however—including much bigger ones than the job growth we’ve seen between 2004 and 2006—and they haven’t had the effect of pushing all wages above the MW limit in the long term. I don’t think it’s plausible that any job increase is effectively going to make the minimum wage obsolete.
You don’t think we do now?
If they’ll do it because they aren’t making enough money if this passes, they’ll do it now for exactly the same reason. I seriously doubt anyone who would do this sort of thing is saying to themselves right now, “My wife could get a ‘job’ at Company X for an obscene amount of money in exchange for a bit of influence on my job… but, nah, I’m making enough money as it is.”