Socialist Sen. Bernie Sanders warmly welcomed a bill that passed the House on Thursday to raise the national minimum wage to $15 an hour. The legislation will not receive that reception from most of the upper chamber, though. It is nothing but a messaging bill that polls well. It would be economically disastrous were it not dead on arrival in Majority Leader Mitch McConnell’s Senate.
Sanders nonetheless bragged on Twitter: “When the political establishment and mainstream media say our ideas are crazy, remember that they said the same about a $15 minimum wage a few years ago. Look what happened.”
Apparently included among the “political establishment and mainstream media” calling a $15 minimum wage crazy is the nonpartisan Congressional Budget Office, which studied all the available economics on the matter and estimated that a $15 minimum wage would kill as many as 3.7 million jobs.
Democrats, who often like to pose as the party of wonks, don’t care about the facts when it comes to wages. On Thursday, 228 House Democrats and a mind-boggling trio of Republicans ignored not just economic theory but a mountain of empirical evidence from cities such as Seattle, that are run by left-wing Democrats.
Many mid-sized businesses and most big ones can absorb modest increases in the minimum wage, economists concede. But the House bill is no modest small-business killer. It would more than double the minimum wage in about half the states in the union. It would also surpass the median hourly wage of three states.
Put another way, Democrats voted to outlaw more than half the jobs in Arkansas.
Kindergarteners sometimes seem to think money grows on trees. So do 231 members of Congress. They do not realize that just because they and their ignorant brethren vote that the value of all hours worked is $15, doesn’t make it so. When the price in wages is higher than the value, the price will not get paid. That is, the buyer, who in this case is the employer, will decide not to buy the work at that price and the job will disappear. The ousted works will know to write their thank you letters to Sen. Sanders and congressional House members.
There’s a bitter irony which is that average real wages are growing for the first time in a long while because labor markets have tightened because the economy is growing and thus more people are in jobs. A shortage of workers pushes up the value of labor and thus produces higher wages.
What’s driving the competition in the labor market is optimism and growth among businesses. A $15 minimum wage across the country would slam the brakes on that growth and douse optimism. So a bill intended to give workers a raise would undermine the conditions that are actually giving them a raise already.
The bill’s proponents argue that the CBO’s average estimate, which still conservatively assumes that we continue the longest bull market in history and avoid any major market fracas that would derail our uncharacteristically booming economy, finds that a $15 federal minimum wage would raise 1.3 million people out of poverty-level wages. But that same estimate found around 1.3 workers losing their jobs entirely.
Working-class wages have stagnated for 20 years. Automation and other technological advances threaten to make it harder for those without college degrees to earn a decent living, especially when you throw in rising health care costs.
Our policymakers should address these economic and cultural changes. Passing legislation to send a bogus message doesn’t address the problems at all.
If Democrats would discard their theatrics, and present real ideas, they might take a step towards helping the working class. But that’s a lot harder than turning a bumper-sticker slogan into a go-nowhere bill and voting “Aye.”
