November 6th, 2006

Brad @ Burning Man

Yes on Missouri Proposition B

I made it clear that while I support Missouri state-wide propositions Amendment 2 and Amendment 3, I accept that there are legitimate reasons to disagree with me and vote against them. I feel no such ambivalence about Proposition B, which would raise Missouri's minimum wage from the current federal level, $5.15, to the same as Illinois', $6.50, and index it to the same cost of living increase that Social Security gets from then on. Please vote for it.

The statement, which you have already heard and will hear again, that "raising the minimum wage raises the unemployment rate, by making businesses lay off those who aren't worth the extra money" is not a proven fact. It is, at best, a hypothesis. During the stagflation of the 1970s, back when Republicans were arguing that the US economy was in the toilet, not because of Vietnam-era runaway deficits and the OPEC oil embargo but because, thanks to the unions, the middle and working classes had it too good, it even became a popular theory. But until you test a theory, it remains only a theory. And the theory that raising the minimum wage causes increased unemployment has been tested. Repeatedly. The minimum wage has risen 26 times since it was first introduced back in 1938. And none of those times did it result in increased unemployment. Not one. On the contrary, we have seen substantial periods of rising unemployment twice in the last several decades. Both of them coincided with long gaps between raises in the minimum wage, from 1981 to 1990 and from 1997 to the present.

Republicans and right wing Democrats will tell you to ignore this evidence, because it can't possibly be true. To them, it simply stands to reason that if an employee is only barely productive enough for a business to pay them $5.15 per hour and you raise the minimum wage, the company has only two choices: lay them off, or take the loss. Obviously they're not going to take the loss. But if they lay them off, the job still needs to be done. Hiring someone more productive will not increase the unemployment rate.

Nor, given the steady rise in productivity following the mass replacement of our industrial equipment in 1998-1999, is it at all obvious that even the least productive person in America is returning less than $5.15 per hour in profits to the companies. It is not at all obvious that they can't afford to pay $6.50. But more importantly, the anti-minimum-wage argument fails because it stops its economic analysis too early. If the worst-paid workers in America suddenly get a $54 per week raise, yes, those companies have $54 per week less per employee in initial profits, because their costs went up by $54 per week per employee. But that $54 per week will get spent, because at that level of our economy, people have huge unmet needs. They'll finally be able to go to the dentist, and the dentist suddenly has $54 he didn't have. They can finally afford to replace the 12 year old rattletrap that gets them to work, and suddenly Chrysler has one less car in their hugely overstocked inventory of unsellable cars. Target can finally sell them winter shoes and a winter coat for their children that they couldn't get this year ... and that has no small economic impact of its own, because if enough people can afford the shoes, clothing, school supplies, and basic furniture they couldn't afford before, Target has to hire people to work the cash registers and sales floors and stockrooms. I've seen it with my own eyes, when the labor shortages at the end of the dot-com bubble were forcing up wages. The result wasn't runaway stagflation, the result was a massive increase in corporate profits in retail and manufacturing that didn't go away until full employment did.

The minimum wage is a fairness issue, but it's more than that. Asking people who work 40 hours per week to live on $800 and change per month causes them to live in a certain way, to accept a certain standard of living and to make certain health sacrifices and to take risks with the way that they raise their children. That way of life and standard of living drags down your property values, those health sacrifices raise your health care costs and expose you to potential epidemics, and the children raised without minimum standards of health, safety, and parental involvement in education grow up to be your social problems. You literally can't afford to live in communities where some of the people are making $5.15 per hour, it costs you in ways you may not even know.

So if you live in Missouri, please show up to vote on Tuesday and when you do, vote YES on Proposition B. And also, please remember that Jim Talent opposes raising the minimum wage and Claire McCaskill supports it. Thank you.