Home > GOP & The Election, Political Ranting > Republicans Kill Minimum Wage Hike

Republicans Kill Minimum Wage Hike

June 26th, 2006

As Republicans busy themselves in a flurry of attempts to shovel hundreds of billions of dollars of yet more new tax breaks to the wealthy, they have just won another victory: they killed any hope of a minimum wage increase. 46 Republicans in the Senate blocked an up-or-down vote on the minimum wage, knowing that it would pass. 8 Republican senators sided with all the Democrats on the up-or-down vote, and likely would have provided the votes necessary to give millions of Americans their first pay raise in almost a decade.

This is the ninth time that Democrats have tried to raise the minimum wage in the past decade, and the ninth time that Republicans have killed it. And they’re still making the same lame, fake arguments that they always have–it’ll mean people will lose jobs, it’ll kill small businesses, it’ll raise prices, it’ll drag down the economy. All false–there is no evidence that any of that will happen, and in the past, the economy and job numbers have gone up as often as they have fallen after minimum wage hikes.

You’d think that a Republican would see it this way. They generally believe that if you shower the wealthy with money, they’ll invest, creating more jobs. Of course, we tried that, and it didn’t work. Rich people got richer, but the “recovery” is relatively jobless, with the new jobs being more and more often at the minimum wage. The results in the 80’s were similar–the rich got richer, but there was no “trickle down.”

Hiking the minimum wage would agree with that Republican throw-money-at-it philosophy, except that it would actually be logical, as opposed to the narrower throw-money-at-the-rich theory. Give rich people money, and there’s no reason for them to spend it on domestic goods or invest domestically. Especially when one can avoid taxes by sending it to the Cayman Islands and other such dodges. Especially when the GOP is making it so easy and profitable to invest in exporting American jobs overseas. Wealthy people are, in fact, probably the least likely to spend the money at home.

On the other hand, if you give the money to working people by hiking the minimum wage, they are definitely not going to sock it away in the Caymans, invest in foreign stocks, or buy a Mercedes Benz. They’re going to buy stuff right here, and it’s going to be basic stuff, far more likely produced in the U.S., most definitely serviced here in the U.S. The money will go right back into the American economy, where it will do the most good–and where it will create more jobs than would be lost, as we’ve seen in the past. And guess what–the last time we hiked the minimum wage, jobs didn’t take a nose dive. Unemployment did not rise. Small businesses did not shut down. Whaddaya know.

The sad thing is, people who make the minimum wage don’t vote as much as other people do–and Republicans do their damnedest to make sure it stays that way, fighting like hell to kill anything like motor-voter registration (God forbid we should encourage people to vote). But if minimum-wage earners started voting like Cubans or the elderly, even Republicans would become their new best friends and discover a change of heart. Which is why Republicans want to stop that, they don’t want to have to nuzzle up to working stiffs. Makes them feel dirty.

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  1. ykw
    June 26th, 2006 at 05:50 | #1

    Several comments

    * many fast food places pay $7/hr whereas min wage is $5/hr, which means many low income folks are getting more than min wage

    * increasing min wage of factory people could possibly increase factory costs and decrease competitiveness w/ overcseas factories, reducing output, and reducing # of jobs

    * however, increasing min wage of service people (e.g. hotel workers) would probably not decrease # of jobs since you can’t get a kid in India to clean a hotel room in Dallas

  2. Luis
    June 26th, 2006 at 12:28 | #2

    #1: if some places pay more than minimum wage, great–but I don’t think that because a few fast food joints do so that this means poor people are OK. There are millions upon millions of minimum-wage jobs, they are replacing better-paying jobs more and more in the Bush economy. These people need relief. And if the minimum wage rises, then probably the people making a bit more might get a bump as well, if not now then down the line. And again, that would spur the economy.

    #2: I don’t think that too many manufacturing jobs pay the minimum wage. Besides, overseas competition pay so far below even the minimum wage, that a producer making a decision on that account would have already moved.

    #3: good point.

  3. Anonymous
    June 27th, 2006 at 06:02 | #3

    In regard to #2 in the first post: any job that is moveable has already been moved. The number of wage sensitive jobs that could be move but haven’t are slim and none.

    In general, fully aware that there are exceptions, those manufacturing jobs that still exist in the U.S. are really those manufacturing products where transporation costs are exceedingly high or the manufacturing process are complex. If a product losses weight as it is processed, then it will be processed closer to the location of raw materials. Also the mode of transport makes a difference, etc…

    Supply side economics presupposes that demand will be forth coming. The fact is, if their is no demand for widgets or buggy whips, then no rich supply-sider is going to invest money to build a widget or buggy-whip factory, meaning supply side doesn’t gurantee the creation of jobs. As Secretary of Rubin tried to suggest, stability and predictability is more likely to stimulate investment. If you can safely predict return on investment, you are likely to make an investment. This then allows government to pursue demand side policies while also enhanceing suppy, creating a very virtuous cycle of economic growth.

    In the current environment, an increase in the minimum wage then would increase demand which then might release pent up capital into creating more supply and more jobs.

    The problem with the Republicans and Bush in particular, is they really don’t want to enpower people at the bottom under any circumstances whatsoever. They like to say that by empowering the rich they are empowering the poor, but even they know that’s a lie.

    Modern market oriented economics are based on the principle of the law of supply and demand. A general principle of economics as it regards to public policy is that what ever you subsidize you get more of, whether you’re subsidizing shoes, widgets, frozen orange juice, petroleum or grain alcohol as a fuel additive. The most basic question of economic policy comes down to what to favor (subsidize) – supply or demand. As a rule of thumb, 2/3 of the economy is driven by consumer spending – that is 2/3 or the economy is largely demand driven. 1/3 of the economy is driven by capital spending and investment, that is, 1/3 of the economy is largely supply driven.

    Real Economist will quibble with the exactness of these proportions, but for conceptual purposes, these figures work just find. Given this 1/3 versus 2/3rds ratio, right off the bat one can see that demand driven policies are likely to be more effective in stimulating economic activity.

    Economic policies that favor supply mean policies that favor, or subsidize capital formation by way of capital accumulation – primarily for the investing classes – say the top 1/3rd of society – but in reality a much smaller slice than that – say the top 1/5th or even the top 1/10th.

    The thought is this money will go into new investment in the latest technologies creating new efficiencies leading to new jobs. Supply-side economics then means giving tax cuts, or finding other ways to drive money and resources into the hands of the investing classes – the top 1/3 of the economy. If the government gives money to rich people they are not likely to go out and buy a new car or refrigerator as Luis suggests, because they are basically already satieted consumers, so they invest it. By giving money to rich people, the government is enhancing supply, not demand. The problem with this is there is considerable lag time between policy creation and job creation. And generally speaking, investors will not build a factory, or creat jobs, if there is no demand for the products the factory makes. Since Reagan, American policy has, in general, favored the supply third of the economy.

    Policies too far to the supply side generate deflationary spirals, per the great depression, because wealth becomes too concentrated into too few of hands: demand goes down against increasing supply so that too many products are chasing to few buyers. Policies too far to the demand side generate inflationary spirals, per Peronist Argentina. Both of these extremes are devastating to an economy and are hard to undo once in place. Fortunately Governments have a lot of wiggle room between the two and it appears that the bigger the economy the greater the wiggle room.

    Finally, it would seem, in a capitalistic society, supply side has a natural bias, and demand is always the problem. Think of it in terms of a gravity model, where mass attracks mass, creating more mass, attracking more mass. In economics, rich and investing class use money to make money, which they inturn use to invest, only to make more creating a cycle where demand is constantly being squeezed out of the economy.

    The solution is then is create means, structural, artificial or otherwise, where by money can be pried away from the wealthy and back into the demand side of the economy. In this sense, unions form an important function. It is no coicindence that the most prosperous period in human history, 1945-1973 was also a period where unions flourished as did liberal economics. Other means of enhancing demand is cola payments to social security and minimum wage. Now at some point you run the risk of having too much demand, but its easier to put the brakes on an economy approaching inflation than an economy trapped in deflation. But there you have it.

    All of this would then suggest that the Republican’s are so much interested in helping the economy or the public, but for a very small slice of it. In the Neocon dreamscape, the rich are enoromously rich and the poor are forever poor. In their misery, poverty and squalor the poor can suck on the tit of religion for the only relief the rich will aford the poor. In the neocon scheme, that is its purpose.

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