Minimum Wage: Feed a Cash Register, Not a Family

The wage debate is really about politicians getting re-elected and increasing profits for retailers.

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With a few weeks remaining in the holiday-shopping season, there’s an earth-shifting political movement to raise the minimum wage. On the surface, it seems like a pretty simple equation, added to a big political pay-off and great social feel-good narrative. 

But, in reality, this is just populist window-dressing to give struggling Americans the false hope of a living wage, when the minimum wages passed will barely amount to a few extra dollars for a Wal-Mart discount. And that's the real goal of this latest exercise: taking more money out of your pocket, not putting it in.

Still, elected officials in a number of cities, counties and states are giving each other warm embraces and fist bumps for what’s being hailed as forward-thinking wage bills passed in places such as Washington, D.C.; Prince George’s County, Md.; Montgomery County, Md.; New Jersey and Massachusetts. Even President Obama joined the fray, making a long-overdue appearance in the poverty-stricken Anacostia section of D.C. (took him long enough) where he attempted a rhetorical half-commitment to passing a federal minimum-wage increase. Meanwhile, Congress hopelessly debates raising the national standard from its embarrassing $7.25/hour to $10.00/hour—perhaps over the dead bodies of House Republicans who aren’t having that.

Lawmakers will sell us plastic bags of wolf tickets about how much this latest movement is driven by moral imperative. Citizens deserve a decent wage, naturally, and there is the sense that any modest increase in wages will suddenly lift poor folks out of poverty. True: Workers, especially those in lower-income brackets, desperately need a massive fiscal stimulus to help them deal with hard times. According to a recent study by the Brookings Institution's Hamilton Project, more than half of American households earn $60,000 or less, which is 250 percent of the federal poverty level for a household of four people, according to federal guidelines

What’s disingenuous about the political conversation, however, is that it assumes that the politicians who are pushing fresh minimum-wage laws—primarily Democrats—suddenly have been gripped by flashes of common sense and empathy. But it’s really a fake debate. Legislators are raising the minimum wage out of political necessity. Faced with workers in major cities demanding wage increases, politicians seek ways to mute any fallout when re-election bids come up. Many will need the usual support from urban labor unions, and a vote for a minimum-wage bill is a checked box. 

This is purely a litmus test exercise for progressive candidacies, no less politically calculated than, for example, conservative candidates who voice their support for pro-life policies just to get through a primary. And, who knows, it might help galvanize Democratic voters in 2014 and 2016.  

Seriously, let’s not fake the funk on this. Recent minimum-wage bills in places like New Jersey and the Washington, D.C., metropolitan area are somewhat of a joke. This is chicken-soup symbolism for weary souls. D.C. City Council members boasted about passing a “living wage” in a city that’s gentrifying so fast its black majority is vaporizing like a bowl of water in a microwave. The proposed $11.50/hour (at which new D.C. occupant and mega-retailer Wal-Mart is laughably balking) works out to a little less than $23,000 a year—and only if you find an employer who’s not looking for creative ways to ditch Affordable Care Act compliance and will let you work for 40 hours a week. Good luck living on that salary in an urban hipster paradise where the average home value is more than $435,000, according to real estate tracker Zillow, and where the median annual income is nearly $70,000. 

And New Jersey voters should not even have bothered to vote for a worthless minimum-wage raise that only went up by a dollar, from $7.25 to $8.25/hour. That’s in a state with a child-poverty rate that’s higher than the 15 percent national average, and where the average home value is more than $261,000.

The president, too, is carefully crafting himself as a sort of pragmatic champion, waging war against income inequality with nicely engineered props in the impoverished black neighborhoods he avoided during his entire first term. But, here, Obama fails to explain the bigger picture beyond his new pedagogy for the oppressed. Raising the minimum wage is not the same as a living wage—which is an important distinction in a climate of higher priced essential goods like gas, food and clothing. Basic living is increasingly expensive these days, as we’ve all noticed, and a potential $10/hour federal wage can’t be expected to make a survivable dent in a recovering economy.

What’s not being said—but what the White House should be honest about—is that as the Federal Reserve considers pulling back on several years of stimulus, many economists (including incoming Fed chair Janet Yellen) are encouraging a new age of inflation to boost the economy. This explains the sudden urgency for raising the minimum wage. But, in the final analysis, inflation only helps inflate the bottom lines of companies who rely on an economy that’s driven largely by consumer spending. Thus, raising the minimum wage is not designed to suddenly give you the pay raise you’ve always needed to get by. It’s merely giving you just enough cash to feed back into a retailer’s pockets as price tags go up—which is coming soon. 

This isn’t about a living wage. This is about shifting enough cash into the economy so Americans can spend more next Black Friday than they did last week. 

Charles D. Ellison is a veteran political strategist, Washington correspondent for the Philadelphia Tribune and chief political correspondent for Uptown magazine. When he’s not mad, he can be reached via Twitter.

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