Google+
Close

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

The Minimum Wage Debate Makes Congressional Republicans Nervous



Text  



While the president and his allies are flailing, there is one issue that has left Republicans flatfooted and that is the call for a substantial increase in the federal minimum wage. The new Quinnipiac survey finds overwhelming support for an increase:

American voters support 69 – 27 percent, including 49 – 44 percent among Republicans, raising the minimum wage. No group is opposed. Offered several options, voter opinions are:

  • 29 percent to increase the minimum wage from the $7.25 per hour to $10.10;
  • 16 percent to increase the minimum wage to less than $10.10 per hour;
  • 22 percent to increase it to more than $10.10 per hour;
  • 27 percent opposed to any increase.

At least some conservatives have embraced the idea of a minimum wage increase. Ron Unz’s campaign for a $12 minimum wage in Calfornia is gaining momentum. But many others are convinced that a large increase in the minimum wage will do more harm than good. Even so, Republican lawmakers seem terrified to engage on this issue, as they recognize its political potency. The usual alternatives to a minimum wage increase, like increases in the EITC, are nonstarters (for now), as the congressional GOP has staked its reputation on spending restraint, and it’s not at all clear that enough money can be carved out of other programs to finance a substantial increase in wage subsidies. In the new Weekly Standard, Michael R. Strain offers an agenda for tackling long-term unemployment, including a lower federal minimum wage for the long-term unemployed:

One thing conservatives might push for is relocation assistance​—​to help the long-term unemployed move from a bad local labor market to a good one. The job market varies widely across cities and states. Instead of continuing to cut UI checks to a New Jersey worker who has been unemployed for eight months, why not cut him a check to help him move to North Dakota, where he has a much better chance at getting a job?

As mentioned above, the evidence suggests that many long-term unemployed workers are “scarred”​—​their lengthy spell out of the workforce is making it difficult for them because firms view workers who have been unemployed for so long as risky hires. Why not reduce the risk associated with the hire by lowering the minimum wage for long-term unemployed workers? A firm may not want to take a $7.25-per-hour risk on a long-term unemployed worker, but might be willing to take a $4 risk. If we lower the minimum wage for the long-term unemployed, then we’ll need to supplement their earnings with an expanded Earned Income Tax Credit or some other government-funded wage subsidy.

To help make sure that we aren’t adding any new workers to the rolls of the long-term unemployed, states without worksharing UI programs​—​about half of them at the moment​—​should start them. Under worksharing, a worker who has his hours reduced by his employer in response to a temporary lull in demand can receive a prorated UI benefit. This makes it easier for firms to reduce employees’ hours by, say, 20 percent, rather than laying off 20 percent of their workforce. Government shouldn’t tilt the scales towards layoffs by prohibiting workers who have their hours reduced from receiving prorated UI benefits.

And Strain also offers an idea that might mitigate the economic isolation of low-income workers within metropolitan areas — “extra buses that run nonstop from low-income neighborhoods to employment centers, both in city centers and in suburbs.” Though I find Strain’s proposals attractive, they are more complex than a minimum wage, and so they might not prove as politically appealing.

Elsewhere, Dylan Matthews interviews one of my personal heroes, the Columbia University economist Edmund Phelps, on his wage subsidy propoal. I’ll write more about why Phelps proposal might be of particular interest in the current climate shortly.



Text  


Subscribe to National Review