Is the Minimum Wage Argument the New Democratic Golden Ticket?

On the Washington Post WonkBlog, Ezra Kelin last week suggested that this chart (above) is in fact the best argument for raising the minimum wage.

He explains the chart while showing why the situation has become dire enough to warrant President Obama speaking about it in his state of the union address:

That red line is corporate profits since 1970. The blue line is labor’s share of income. As you can see, corporate profits are skyrocketing while labor’s share of those profits is falling. This is a big part of the reason that median wages are stagnating even as the economy grows and the wealthy become ever more fabulously rich.

The problem is severe enough that it earned a mention at the beginning of President Obama’s 2013 State of the Union address. “We gather here knowing that there are millions of Americans whose hard work and dedication have not yet been rewarded,” he said. “Our economy is adding jobs – but too many people still can’t find full-time employment. Corporate profits have rocketed to all-time highs – but for more than a decade, wages and incomes have barely budged.”

Klein argues that Team Obama has put forth many helpful policies that have been spurned by Congress. He argues that raising the minimum wage is not the best way to help low wage earners and that previous attempts to boost the middle class would have been more effective:

There are better ways to accomplish this same goal, most of which run through the tax code. The Obama administration’s first attempt was the Making Work Pay tax cut, which provided a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers. But Republicans refused to renew it in 2011. So then the Obama administration moved to the payroll tax cut, which cuts payroll taxes by two percentage points in 2011 and 2012. But Republicans — and some Democrats — refused to extend it into 2013. They also expanded a variety of refundable tax credits for low-income workers — notably the Earned Income Tax Credit and the Child Tax Credit — in the stimulus, and those have survived.

A minimum wage increase is enjoying broad support across the board among voters. Democrats are currently championing the cause and are in position for a major political victory if the legislation passes. Interestingly, research shows that voter turnout dramatically increases when the minimum wage is part of a ballot initiative:

• Turnout is consistently higher in initiative than non-initiative states, 7-9 percent higher in mid-term elections.
• In 2004 in Nevada, 24 percent of all voters were motivated by the minimum wage ballot question, including 34 percent of Democratic voters, 35 percent of independents, 35 percent of low income voters, 33 percent of Democratic state legislative voters and 32 percent of less educated voters.
• In 2004 in Florida, 19 percent of all voters were motivated by the minimum wage ballot question, including 28 percent of Democratic voters, 2/3 of previously non-voting African-Americans, 26 percent of younger women and 29 percent of less educated voters.

Ballot Initiative Strategy Center executive director Justine Sarver said in a statement:

“We know that intentional, targeted proactive ballot measures can increase turnout among key voters, especially in off-year elections. The question for progressives heading into 2014 is: Which issues will really resonate with voters now and make a positive difference in their lives? Minimum wage? A fundamental right to vote? And what other issues resonate, and are meaningful to people, in addition to these?”

Time will tell how the championing of minimum wage increases will effect the Democratic party. Klein explains that there is a lesson to be learned for the Republicans who squashed the President’s previous attempts to address wage issues without a wage increase mandate:

There’s a lesson in here for Republicans. When they kill the Obama administration’s more technocratic proposals but don’t propose an alternative way to solve the underlying problem, they end up getting backed into a corner by his more populist proposals. That basically happened in the tax debate, where they refused to cut a big deal that included tax reform and so got stuck with a tax increase that simply raised rates. It’s likely to happen here, too.

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