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Restore the Minimum Wage
Progressive Populist
by Nathan Newman
October 01, 2003

How's this for an issue for progressive candidates to campaign on? • It's supported by 80% of the population.

• It'll put tens of billions of dollars into working families' pockets each year.

• It won't raise the deficit.

• It's an economic policy that accompanied boom times in the past.

It's an $8 per hour minimum wage.

That was the minimum wage in inflation-adjusted dollars that a person could be paid back in 1968. Yet despite 35 years of out-of-control CEO pay hikes, working people have seen the minimum wage fall to just $5.15 per hour today -- $10,712 per year for a full-time worker.

Restoring the minimum wage to its 1968 level would be a first step in helping working families make ends meet.

Helping 20% of the Population: Almost 20% of the working population -&endash; about 25 million workers -- make less than $8 per hour and would benefit from the raise. An additional number making more than $8 per hour will get a pay increase as employers feel pressure to raise wages across the board at the lower end to compete for more skilled workers who previously had only those $5.15 an hour jobs to fall back on.

Raising the minimum wage will increase the income of those workers up to $6,000 per year for full-time workers. To achieve the same result for this population with tax funds would cost somewhere around $50 billion each year, unlikely in our present deficit situation, so this is the best policy bet for helping the working poor.

Why $8 per hour? On one level it's a very conservative number. All it does is restore the value of the minimum wage to about where it was in real dollars back in 1968. It seems reasonable that after 35 years of growth, the working poor should at least be making the same amount as back then.

Others would reasonably ask why not a larger increase -- and the reductio ad absurdum is for conservatives to say, yeah, why not raise it to $50 per hour. The simplest answer is empirical -- let's raise it to the rate in 1968 when the economy did fine with it at that level. Then talk about raising it some more.

A number of states have already raised the minimum wage significantly above the national level ($7.15 in Alaska, $7.05 Washington State, $7.10 Connecticut [effective 1/04], and so on) and Santa Fe, N.M., has raised their local minimum wage to $8.50 per hour with San Francisco voting on a similar increase this fall. So $8 per hour is right in the consensus level of state and local initiatives around the minimum wage.

What about lost jobs? Conservative critics of the minimum wage always claim the minimum wage increases unemployment, yet unemployment is higher today than back in 1968 when no one made less than $8 per hour. You wonder how conservative opponents explain that.

In recent years, a range of empirical studies have shown that raising the minimum wage a moderate amount does not cost jobs, most famously illustrated in economists David Card and Alan Krueger's Myth and Measurement: The New Economics of the Minimum Wage. They found that rather than decreasing employment, a rise in the minimum wage just encourages less turnover and higher productive labor for previous low-wage work. With most firms having large "sunk costs" of capital that will be wasted if employment is reduced, it would be irrational for them to cut employment since they would lose more profits by cutting production than they could ever potentially lose from paying the increased wages.

Bringing the working poor back to the ballot box: Progressives should be promoting the minimum wage as a way to make politics relevant again to working families. Poorer voters have low turnout rates largely because so much of national debates don't address their basic concerns of earning a decent living.

A few years ago, Washington state ran a minimum wage campaign that effectively used a ballot initiative raising the minimum wage as an effective spur to turnout. If you want to appeal to low-wage voters who rarely turn out, a campaign to raise the minimum wage is a direct way to make elections relevant.

A campaign for a higher minimum wage would improve our democracy and the lives of tens of millions of working families.

Nathan Newman is a lawyer, longtime community activist. Email or see

Posted by Nathan at October 01, 2003 09:06 PM