The debate over whether to raise the minimum wage is front and center this week as a Congressional Budget Office report gives political ammunition to both sides, and a former Clinton administration budget official claims the benefits of the hike so easily outweigh the downside that “it’s hard not to do it.”
In his State of the Union message, President Obama urged Congress to raise the federal minimum wage to $10.10 per hour, saying it is simply wrong for any Americans to be working hard and still living in poverty. On Dec. 4, Obama said, “There’s no solid evidence that a higher minimum wage costs jobs, and research shows it raises incomes for low-wage workers and boosts short-term economic growth.”
On Tuesday, the Congressional Budget Office, or CBO, issued a report showing that following Obama’s plan would result in 900,000 people rising out of poverty and 16.5 million people benefiting from the wage hike. The CBO also projected the move would cost the economy between 500,000 and one million jobs.
Larry Haas served as spokesman for the Office of Management and Budget during the Clinton administration. He said the CBO report should make the question of raising the minimum wage a no-brainer.
“What’s really startling about this report is that while it acknowledges some job loss, the corresponding benefits so greatly outweigh the costs that it almost looks like it’s hard not to do it,” Haas said.
Listen to the WND/Radio America interview with Larry Haas below:
Haas admits the job losses could negatively impact the same number of people that would supposedly escape from poverty following a minimum wage increase, but he argued that other factors would still make such a move a net positive.
"We are talking about costs versus benefits, and just in raw number terms, even if we talk about closer to a million (jobs eliminated) as offset by the close to a million who would rise above the poverty level, and you consider that to be somewhat of a wash. I'm not minimizing the job loss, but if you consider just the raw dollars, you look and just go to the second level of this and see all the other low-wage workers who would get a benefit out of this as employers naturally raised their wages, 16.5 million people," Haas said.
"At the end of the day, you look at any proposal and you say, 'OK, where's the good? Where's the bad, and where does this come out? While I don't minimize the job loss, I look at these raw numbers and I have to say, you know what, this would be a net benefit to society and to working people writ large."
Republicans and other conservatives are largely opposed to Obama's call for a minimum-wage increase and are pointing to the CBO's projected job losses if the plan were to become law. Instead of raising wages for the lowest skilled jobs, many argue for reduced corporate taxes, deregulation and rolling back employer obligations on programs like Obamacare.
Haas embraces some of those ideas while dismissing others but says a hike in the minimum wage can be done alongside some of the GOP's ideas.
"I don't necessarily disagree with all their approaches," he said. "I do think that the corporate tax is too high by way of international competitiveness. I do think that there are always opportunities to reduce regulation. On Obamacare, I think their concerns are, frankly, overstated and in many ways misconstrue what's happening.
"Just because we have other possible ways of promoting economic growth and spurring jobs doesn't mean we should dismiss this one."
Meanwhile, the Heritage Foundation warns, "This proposal would raise the minimum wage to unprecedented levels. The minimum wage already stands above its historical average. Since 1950, the federal minimum wage has averaged $6.62 per hour in 2013 dollars. It peaked in purchasing power at $8.28 per hour in 1968.
"This legislation would raise the minimum wage one-seventh above its all-time high. It would significantly raise the cost of hiring unskilled and inexperienced workers during an already weak economy."
But Haas believes a bump in the minimum wage is the only politically realistic move in the near future.
"The fact of the matter is that Obamacare is not going to be repealed. The fact of the matter is we're not going to see tax reform anytime soon, just because of the politics on the Hill. The administration will either reduce regulations or they won't. This is the issue before us at the moment. Congress can act. The president can sign it into law. I think that the case is very compelling. Whether we do any of the other things that would spur growth and create jobs, we should do this," he said.
Another major point of contention in this debate is who actually earns the minimum wage. Is it largely moms and dads who cannot find other work and rely on those wages to support families, or is it mostly teenagers and other young people who will later find higher-skilled and better paying jobs?
The Heritage Foundation explains, "Most minimum-wage jobs are entry-level positions filled by workers with limited education and experience. Almost three-fifths of minimum-wage workers have no more than a high-school education, and half are under the age of 25. They work for the minimum wage because they currently lack the productivity to command higher pay.
"Minimum-wage jobs give these workers experience and teach them essential job skills. Often these skills pertain more to general employability than to a particular job: the discipline of being a reliable employee, learning how to interact with customers and coworkers, how to accept direction from a boss, etc. These skills are essential to getting ahead in the workplace but difficult to learn without actual on-the-job experience.
"Once workers gain these skills, they become more productive, and most quickly earn raises or move to higher-paying jobs. Over two-thirds of workers starting out at the minimum wage earn more than that a year later. Minimum-wage increases saw off this bottom rung of many workers' career ladders."
But Haas strongly believes it's mostly moms and dads who cannot find other work.
"Those who oppose a minimum wage increase tend to overstate the number of so-called teenagers who are just working side jobs, and this really isn't their livelihood, and we really don't need to give them a boost," Haas said. "I can't break it down in percentage terms, but the fact of the matter is that a very large share of minimum-wage workers is the single mom with the kid or two or three, who's trying to scrape by and who may have more than one job and having trouble making ends meet with the child care expenses that she needs to pay.
"Those are really the people we've got to worry about in this kind of an economy where we see such long-term unemployment and such lingering unemployment from the Great Recession," he said "Anyone who really thinks this is about teenagers is just missing the boat."