Romney Wants GOP to Be the Party of Jobs and a Minimum Wage Hike
Acknowledging that many in his party feel otherwise, 2012 Republican presidential nominee Mitt Romney said in a Thursday morning interview on MSNBC, “I think we ought to raise it,” referring to the minimum wage. “Because frankly, our party is all about more jobs and better pay.” He noted that the GOP will only further alienate minority voters by opposing increases to the minimum wage floor.
Romney’s break with Republican orthodoxy comes at an important moment in the U.S. economic recovery. Even though job creation is not as sluggish as it was during the cold winter months, the level of long-term unemployment remains high, and wage growth continues to be stagnant. He argued that income inequality has only grown worse under Democratic leadership.
In general, economists believe that lifting the lowest legal pay is worth the fallout, including lower levels of job creation. This January, 600 economists signed a letter, published by the Economic Policy Institute, that argued it was time to increase the federal minimum wage to $10.10 per hour and index it to inflation. Signing that letter were seven Nobel laureates; Robert Reich of the University of California, Berkeley; several Brookings Institution scholars; and Paul Swaim of the Organization for Economic Co-operation and Development.
While some would argue that a higher minimum wage means fewer jobs, Steve Coll, the dean of the Graduate School of Journalism at Columbia University, argued that the impact will be minimal. “At some theoretical level, high minimum wages will distort job creation, but the best empirical evidence from the past decade is aligned with common sense: a minimum wage drawn somewhat above the poverty line helps those who work full time to live decently, without having a significant impact on other job seekers or on total employment,” he wrote in The New Yorker in December.
But for economists at the Manhattan Institute, Seattle’s agreement to raise the city’s minimum wage to $15 per hour provides a solid case study of why not to lift that pay floor. At that level, a 61 percent increase from Washington state’s current minimum wage of $9.32, the city will have one of the highest minimum wages in the country.
“With a $15 minimum wage floor, Seattle can say goodbye to many of its low-skilled workers,” wrote Jason Russell on May 6. “The city government must have decided it can do without them because of the city’s high-skilled workforce — Amazon.com and Nordstrom are two examples of corporations headquartered in downtown Seattle, in addition to several medical and biotechnology firms,” he said. But the “low-skill jobs remaining in the city will see increased competition, with medium-skilled, experienced workers winning out over low-skilled, mainly young, workers trying to reach the first rung of the career ladder.”
The debate over what constitutes a livable wage in the United States has cropped up periodically in the five-plus years of Barack Obama’s presidency. In his first address to Congress of his second term, Obama asked lawmakers to lift the federal minimum wage from the $7.25 rate set in July 2009 to $10.10 an hour, but his request went unheeded.
Obama adjusted his tactic this year. “To every mayor, governor, and state legislator in America, I say you don’t have to wait for Congress to act: Americans will support you if you take this on,” he noted in his 2014 State of the Union. “And as a chief executive, I intend to lead by example. Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too.”
In his “lead by example” comment, Obama was referring to his plan to expand economic opportunities for the middle class by using his presidential authority, a tactic he has since put into action. Earlier this year, he issued an executive order increasing the minimum wage for federal contract workers because “If you cook our troops’ meals or wash their dishes, you shouldn’t have to live in poverty,” he said.
Today’s minimum wage — which roughly adds up to a yearly income of $15,000 — is worth approximately “20 percent less than it was when Ronald Reagan first stood” before Congress, according to the president. The difficulties of affording housing, a car, groceries, and utilities on a minimum wage salary are well documented. Currently, the federal poverty line for a two-person household is set at $15,730 per year.
It will take an act of Congress to increase the lowest legal pay for the approximately 4.8 million minimum wage workers across the United States who earn $7.25 per hour and improve the wages of the 27.8 million people who earn less than $10.10 per hour, many of whom do not fit the low-wage stereotype of a teenager with a summer job. But minimum wage legislation has stalled in Congress. Late last month, by a vote of 54 to 42, senators voted against going ahead on a bill that would gradually increase the federal minimum wage from $7.25 per hour to $10.10 per hour.
Yet even while Republicans in Congress, organizations such as the U.S. Chamber of Commerce and the National Retail Federation, and employers of low-wage workers bemoan the effect a hike would have on business, the nature of the debate is changing. Voices that carry weight, like that of Romney, have lent their support to the argument favoring the minimum wage increase. Plus, states are lifting their own minimum pay rates independently.
Yet politicians — both congressional Republicans on one side of the debate and their Democratic colleagues and the White House on the other — remain entrenched. This stance is by no means new: Minimum wage has been a major front in the political battle between Republicans and Democrats since President Franklin D. Roosevelt’s Great Depression-era New Deal package of reforms. Those on the right of the political spectrum argue that a substantial increase to minimum wage would dramatically hurt employment.
While a minimum wage increase is a nonstarter in a divided U.S. Congress, a number of states have moved forward on the issue. Currently, 21 states plus Washington, D.C., have lifted minimum wage above the federal government’s lowest pay level, and that group will soon include five other states — lawmakers in Maryland, Minnesota, Delaware, West Virginia, and Hawaii recently approved minimum wage hikes. Connecticut, New York, California, and the District of Columbia also recently approved wage floor increases.
For the most part, the states that have chosen to increase the federal minimum wage are blue states. Even West Virginia, which went to Romney in the last presidential election, has generally leaned Democratic since John F. Kennedy won the state in 1960. But even at the state level, the issue of minimum wage tends to be a politicized issue.
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