Under President Obama’s policies, a record number of Americans are living in poverty. From January 2009 to December 2013, median household income fell nearly $4,000. According to the Bureau of Labor Statistics, Americans between the ages of 18 and 34 comprise a whopping 46 percent of those unemployed.
This is simply not the economic recovery President Obama promised. It’s not surprising that the ABC News/Washington Post poll released Tuesday showed that 36 percent of Americans believe the economy is getting worse and 35 percent believe it’s staying the same.
Perhaps one reason so many people feel like our economy is in a rut is because while “employment is coming back…so much of it is not good employment,” as the Washington Post summarized. “[T]he industries responsible for the most job creation over the last four years are also the industries that pay the least.” Jobs in the retail, administrative/support and food and drink services industries “account for 39 percent of the gains in private-sector employment since the recovery ostensibly began four years ago.”
The people who work in these sectors are often paid hourly, typically at a rate between nine and $14, according to the Post.
As it turns out, ObamaCare has hit hourly workers particularly hard. They’ve seen their paychecks reduced thanks to the law’s arbitrary definition of a full-time job—which is why House Republicans passed the Save American Workers Act (H.R. 2575) to help increase wages by repealing Obamacare’s 30-hour rule.
As the harmful effects of their policies pile up on workers and families and cut into their wages, Democrats are turning to yet another election year gimmick: a big increase in the federal minimum wage. It’s an old idea that sounds good in theory. Liberal experts like the ones who designed ObamaCare and promised their 2009 economic ‘stimulus’ package would keep the unemployment rate below 8 percent swear this will do the trick. In reality, Democrats are suggesting another policy that will cost Americans dearly – especially those it is meant to help.
Arthur Brooks, the president of the American Enterprise Institute (AEI), recently explained this (emphasis added):
[The minimum wage] makes it marginally more expensive to hire new low-skilled employees in exchange for ensuring a marginally higher standard of living for those with jobs already. A January 2013 report from the National Bureau of Economic Research surveys the recent literature and concludes that—consistent with the views of virtually all mainstream economists—“minimum wages pose a tradeoff of higher wages for some against job losses for others.”
So minimum wage laws create both winners and losers. The winners tend to be secondary earners in middle-class households, and the losers tend to be the least-educated workers with the most tenuous grip on jobs to begin with. For short, imagine a public policy that reduces opportunity among urban, minority youth in order to provide pay raises for my teenage children. That policy exists, and it is the left’s top priority. Never mind that the Employment Policies Institute finds “no statistically significant evidence that a higher minimum wage has helped reduce financial, housing, health, or food insecurity” among the poor households it is claimed to assist.
Former Congressional Budget Office (CBO) Director Douglas Holtz-Eakin agrees, writing that it “is simply perverse to redistribute from the job seekers to the job holders. Who would be helped by a minimum wage increase? Teenagers and young adults from affluent families. It’s hard to see how increasing the minimum wage would combat income inequality when it’s such a windfall for the top 20 percent of earners.”
Need more facts? CBO’s experts studied President Obama’s proposal and released their findings in February: the president’s plan would cost the economy up to one million jobs, with a median estimate of 500,000 jobs lost. The report also said that many who need work the most “would be jobless— either because they lost a job or because they could not find a job — as a result of the increase in the minimum wage.” Federal Reserve chair Janet Yellen agreed with this analysis, and it is also supported by a large majority of other research.
It would appear that President Obama’s recently-departed director of the National Economic Council understands these facts. Gene Sperling was chief economic advisor to President Clinton in 1998 when Senator Ted Kennedy proposed increasing the minimum wage by roughly 40 percent to $7.25. In a memo at the time, Sperling advised the president against the legislation: “Your entire economic team believes that this approach is too aggressive and are concerned that Senator Kennedy’s proposal could prove damaging to the employment prospects of low-skilled workers, as well as to the general macroeconomic performance of the economy.” President Obama’s proposal is nearly identical to Kennedy’s.
Raising the minimum wage may benefit a small number of people, but it’s not a real solution to poverty, income inequality, or the harmful side effects of Obamacare. That’s what the science says. As President Obama likes to say, the “debate is and should be over.”
The real solution to these problems is to create a stronger, healthier economy and more jobs, as well as repeal and replace ObamaCare. So instead of promoting feel-good policies that will hurt the most vulnerable – those who can’t find work in the Obama economy – Democrats should offer a real plan for growing good-paying jobs and expanding opportunity for all.
If they can’t come up with one, the House has passed a stack of bills that would create jobs and increase wages. Majority Leader Harry Reid (D-NV) can start with them.