September 1, 2014
By Oren M. Levin-Waldman
The minimum wage has long been thought of as an issue that only affects the low-wage labor market, i.e. the working poor. Broader construction of the minimum wage population, however, shows that not to be the case. When the minimum wage labor market is defined as the effective minimum wage population — those who earn around the minimum rather than those who earn the statutory minimum — the proportion earning an effective minimum wage is considerably larger.
Moreover, if we understand that an increase in the statutory minimum wage can ripple upwards through the wage distribution, we can then understand that the minimum wage is ultimately about helping the middle class.
As much as bolstering the middle class is important because increased purchasing power will boost the economy by increasing aggregate demand for goods and services, the middle class argument needs to be the centerpiece of a political strategy to increase the minimum wage. For too long the debate surrounding the minimum wage has manifested itself in a side show between those arguing the adverse employment consequences specifically for teenagers and those arguing the benefits to specifically the poor. Herein lies the problem. Politically speaking it is a non-issue.
A focus on teenage employment consequences only feeds the myth that only a small segment of the labor market really derives benefit. Moreover, because this small segment are teenagers, they are secondary earners, meaning that they are not primary earners. In other words, what they earn is “funny” money. Therefore, society should not risk higher teenage employment just so teenagers can have more to spend on frivolous things. At the same time, to argue the benefits that accrue to the poor is unfortunately a weak argument because of society’s tendency to stigmatize the poor.
Our views about the poor still rest on a distinction between the worthy and unworthy poor that harkens back to the English Poor Laws of the 1500s. Beggars, i.e. those considered able bodied were to be treated harshly. For the first offense, they were often flogged and then sent to a jurisdiction to do work; for subsequent offenses they might even be put to death. The American distinction similarly maintains that those who are poor through no fault of their own — widows, the disabled, and orphans — should be treated charitably while those are able-bodied should be treated harshly. Within this framework one is poor because of some moral defect, and the notion of market failure does not constitute being poor through no fault of one’s own.
Arguably one who works even for the minimum wage is also poor through no fault of his or her own. Surely, this person is not a beggar. But opponents of the minimum wage have managed to apply the worthy/unworthy distinction to minimum wage earners. They are still unworthy because they lack the skills necessary to command higher wages. Put another way, they still have a defect which renders them unworthy of a minimum wage, let alone a higher one. If minimum wage workers, so the mantra goes, want to earn higher wages they should acquire the requisite skills to command higher wages. In other words, the onus is on the low-wage worker; not an economy where the creation of low-wage jobs is considered to be positive job creation.
When these two arguments are brought together the conclusion is inescapable: raising the minimum wage will not help the poor because those without skills will be the first to lose their jobs due to higher mandated wages. And given that most minimum wage earners are teenagers and not poor, the benefits clearly do not outweigh the higher costs of lower employment, especially among the most vulnerable in the labor market. Of course, the broader definition of the minimum wage population undermines this conclusion. Most effective minimum wage earners are not teenagers, and even those who are secondary earners in what might be described as lower middle class households are still essential to the maintenance of their households.
Rehearsing these arguments really gets us nowhere other than both sides managing to speak past one another. Strategically, supporters of the minimum wage need an argument that will in the end appeal to the median voter, and that is a middle class argument. To talk about how the minimum wage benefits the middle class is of course something that resonates with the middle class. The typical middle income earner whose wages are above the minimum has to be convinced of why he or she will also benefit from an increase in the minimum wage. To show that a regular increase in the minimum wage will help arrest wage stagnation and narrow the gap between the top and the bottom, which has only symbolized the disappearance of the middle class, might be a more effective argument than that the minimum wage simply increases the income of the poor. Moreover, there is historical precedent for it.
When the Social Security Act was passed in 1935 it was presented as a middle class entitlement rather than another redistribution scheme that would aid retirees who just happened to be poor. Because everybody paid into the program, everybody was entitled to receive benefit from the program. Although those who pay more in do receive larger benefits upon retirement, those at the bottom of the income scale do receive disproportionately more than they paid in. But the creation of Social Security as a middle class entitlement wasn’t simply a moral argument; it was a strategic political one. The architects of Social Security understood that it would never get the support needed for passage unless it was presented as a middle class program.
Although public opinion polls show that a majority of Americans are sympathetic to the minimum wage, it does not follow that they would actively push for it when it isn’t clear how it benefits them. To only focus on the benefits to the poor only marginalizes an issue which is too important to be marginalized. Supporters need to make the middle class argument in order to make it a matter that a majority of middle class Americans can relate to. When it is presented as a middle class issue, it only then becomes harder for critics to retort that the minimum wage is nothing more than a “feel-good” measure aimed at achieving fairness. Finally, when the minimum wage is presented as a middle class issue, it is no longer is a partisan issue because it is an issue that affects us all.