ChrisWeigant.com

The Crucial Overlooked Issue In The Minimum Wage Debate

[ Posted Thursday, February 25th, 2021 – 17:39 UTC ]

The increase in the federal minimum wage currently being discussed in Congress will be revolutionary if it passes, but not for the reason you might first suspect. Admittedly, a raise to $15 an hour will be monumental in absolute terms, since it will more than double the paltry current rate. That's pretty notable, but it's not what I mean when I say revolutionary. Because the truly revolutionary thing about this bill is that it will quite likely be the last minimum wage raise Congress ever votes on. And surprisingly, this is actually a good thing.

The federal minimum wage has not kept pace with inflation, which is pretty obvious. The highest modern minimum wages (in real economic purchasing power) existed in the 1960s and 1970s. If the rates back then had indeed kept up with inflation, the minimum wage would now be over $20 an hour, in fact. Which would be enough for workers to live on (it works out to roughly $45,000 a year). But the method for raising the minimum wage has always been the same -- Congress has to propose it, haggle over it, and vote on it. Which is why the minimum wage hasn't been raised in the past decade, and why it hasn't kept up with inflation (not even close, really). Because it is such a political football.

Congress used to have the same exact problem when it came to raising their own pay. Unlike any normal employees, Congress as a whole gets to set their own salary levels. But they used to be forced to vote on it, each and every time. And this was -- for obvious reasons -- a politically dicey vote. The opposition ads really just wrote themselves: "Congressman Jones couldn't manage to pass [name of some popular legislation that didn't make it] but he did find the time to raise his own pay! Send Jane Smith to Congress instead, and she will have her priorities straight and put the people first!" It was a huge political liability, especially when economic times were bad.

Tired of having to go through this every couple of years, they finally arrived upon a brilliant solution: pass just one final law that laid out how congressional pay would increase forevermore, using a "cost of living adjustment" (COLA). The pay hikes would be automatic -- unless Congress actively voted against their own raise. This way, when times were bad, Congress could appear virtuous by turning down raises, and when times were good, their pay would go up so smoothly and automatically that the public wouldn't even notice. It's a brilliant idea, politically-speaking, and it even survived a challenge from a constitutional amendment (which itself is a rather amusing story). So that's the way Congress raises it's own pay, to this day. If they do nothing, then their raise happens automatically.

Taking a page from this playbook, a new automatic COLA has been built in to the minimum wage legislation now being debated. But, for some reason, not much attention is being paid to this rather key issue.

This is rather mystifying, since this could be a downright historic change. Why aren't Democrats loudly touting this aspect of the bill? I have no idea. Why aren't the pundits making more of it? Perhaps they just don't understand how important it will be, from now on. Why aren't the Republicans attacking it? Well, they've decided to focus on the amount ($15 an hour) rather than any side issues (which is understandable, for them).

You'd think it'd be a bigger deal that this may in fact become the last minimum wage raise bill ever to make it through Congress. From this point on, raises will be indexed to inflation, and the minimum wage will be automatically adjusted each and every year. We will never again get to the point where the purchasing power of the minimum wage continues to shrink each year that Congress fails to act. That is indeed a revolutionary change, you have to admit. And it's one I've been calling for since the second column I ever wrote, way back in June of 2006.

It also makes the fight for the full $15 even more important, because there will be no "we can fix it later on" bill following this one. The politicians are just never going to want to revisit the issue of the minimum wage ever again. They'll consider it a done deal that needs no further attention. But all of the future raises -- all of the COLAs -- will be based upon whatever baseline rate gets set now. To put this another way, if Joe Manchin gets his way and the minimum wage only rises to $11 an hour, it will probably take more than a decade (after it reaches that point, mind you, since the raise under discussion will be phased in over a number of years) for the rate to climb up to $15 an hour. It could take until 2040 or beyond for it to get there, to put this another way. And that base rate is just never going to be adjusted by Congress again, because of the built-in COLA.

This is why the fight for the full $15 an hour is so crucially important. This is not a normal minimum wage bill, where if you don't get the full amount you can revisit the subject in a few years -- this is instead going to be the last train out of this station forever. So we're not just arguing about a number for the minimum wage to achieve by 2025 (after the phase-in period) but we're arguing about the entire future buying power of any worker on minimum wage for as far as the eye can see. This is it -- this will be the last chance Congress will have to set this rate.

Again, this is rather revolutionary to contemplate, because passing this one will be so different than any of the previous minimum wage bills. This change is going to largely remove politics from setting this rate ever again.

So when Bernie Sanders and other progressives fight hard for $15 an hour, there's a reason they're going to fight so hard to achieve it. Because in the future, Congress is just never going to vote on the issue again (barring some extraordinary circumstance). This is the last battlefield. It is the final fight. Which is why achieving the full $15 is so important. Again, this issue really should be at the center of the political conversation about the minimum wage rise, but for some inexplicable reason, so far it has not been.

 

[Editorial Note: This was written before the Senate parliamentarian issued a ruling on whether including the minimum wage hike in the COVID-19 relief bill is allowable under Senate rules or not. So this issue could either be an immediate one in the next week or two, or it could wind up being fought later this year. I tried to wait until the ruling appeared, but it got so late I had to start writing. In any case, that's why the subject wasn't even discussed within the article.]

-- Chris Weigant

 

Follow Chris on Twitter: @ChrisWeigant

 

25 Comments on “The Crucial Overlooked Issue In The Minimum Wage Debate”

  1. [1] 
    Chris Weigant wrote:
  2. [2] 
    Elizabeth Miller wrote:

    Chris,

    This is rather mystifying, since this could be a downright historic change. Why aren't Democrats loudly touting this aspect of the bill? I have no idea.

    But, you do have more than an idea, right? I mean, Democrats aren't loudly touting this aspect of the bill for the same reasons they can't put a stake in the heart of the Repulican cult of economic failure or tout any other popular issue.

    It's a failure to communicate and Democrats are great at it! Sigh.

  3. [3] 
    Elizabeth Miller wrote:

    Bad timing, eh?

  4. [4] 
    Elizabeth Miller wrote:

    The Democrats will just have to find another way. Oh, wait ...

  5. [5] 
    Elizabeth Miller wrote:

    Well, Biden did say that it might not be doable in the Covid relief bill, so ...

  6. [6] 
    John M from Ct. wrote:

    How depressing that Congress, if it passes this bill, will lock in forever a 25% pay cut for the working class. Compare this much-hailed $15/hour rate to the figure you say it was for the decades of the 60s and 70s, before the Great Inequality Movement was launched: about $20 an hour.

    Why didn't anyone start with $20 this time around? Why is $15 so radically generous as to be unacceptable even to conservative Democrats? Inconceivable even to Bernie Sanders?? If I understand the long-term trends, national wealth and productivity have soared since the 1970s, even if working class incomes .. ah, how can we put this? ... HAVEN'T. In other words, the money is out there! Take a few years to ramp the index up, sure, but if you're going to lock in a rate forever using this much-vaunted Cost of Living Adjustment, why not take the opportunity to make America great again in an actually meaningful way, Democrat-style?

    Humph.

  7. [7] 
    John M from Ct. wrote:

    OK, just saw the update at the top of the thread [1]. As Chris feared, the column's relevance has tanked somewhat in the past fifteen minutes.

    Well, there's another really, really good reason to abolish the filibuster, now, before the summer recess, and pass some really useful laws - H.R. 1, infrastructure, climate change, Obamacare reform, judicial reform, and now the minimum wage as well.

  8. [8] 
    MtnCaddy wrote:

    [2]

    Elizabeth wrote:

    I mean, Democrats aren't loudly touting this aspect of the bill for the same reasons they can't put a stake in the heart of the Repulican cult of economic failure or tout any other popular issue.

    It's a failure to communicate and Democrats are great at it! Sigh.

    The Dems could and would communicate this message...but they'd have to want it to happen.

    And this is where my cynicism kicks in. Since Reaganism began 40 years ago the Dems have largely gone along with allowing wealth (and political power) to concentrate at the top. This is why Joe was way down on my list a year ago, because I thought he was just another lying whore for the rich. Action talks and malarkey walks so let's see what Joe actually does.

  9. [9] 
    MtnCaddy wrote:

    [6]

    Excellent point, my man!

  10. [10] 
    MtnCaddy wrote:

    I was just sitting here and suddenly this thought jumped into my head:


    Wouldn't it be a hoot if QAnon was a creation of a foreign adversary? Maybe Russia, the Chinese or Iran (payback for Stuxnet?)

    The Rooskies would be my best guess -- they've always produced the best Chess players and know the American mind better than non-white, non-Christian Iran and China.

  11. [11] 
    MtnCaddy wrote:

    [6]

    BTW I believe the figure is $26 per hour if the late 1960s/early 1970s minimum wage had simply kept up with inflation.

    Never mind the vastly increased American worker productivity over this time period.

    Hey, American Dream! How's that Reaganism thing working out for you?

  12. [12] 
    Don Harris wrote:

    John M (6), Mtn Caddy (11)-

    That's part of what I was going say.

  13. [13] 
    Don Harris wrote:

    The reason the Deathocrats haven't been touting the Cola aspect is because like the public option on Obamacare that is the excuse Deathocrats will use as a compromise issue to get the bill passed by giving it up.

    But the real overlooked issue is that the 15 dollar minimum wage is nothing but a bandaid on a compound fracture. And somehow that is the debate we are having- whether to do nothing or patch it up with a bandage and say all better.

    It is solution from forty years ago in a different economy that no longer exists.

    Let's hope this IS the last debate on a minimum wage other than eliminating the need for a minimum wage by passing the solution we need now- a BMI and medicare for all with a private option.

    This will level the playing field between employers and workers as workers will not be in the position of having to work for less than they deserve because they need to work to survive. That vast majority of citizens will still want to work to improve over basic minimum survival. Employers will then get workers that want to work and that won't feel 8,10 or 12 dollars an hour isn't enough anmd makes it feel like they are not getting paid enough to survive on.

    It will eliminate all the overhead of all the different programs like unemployment insurance, housing assistance, social security, etc. which would no longer be needed because of the BMI which would probably cost less than what we are spending on all those other programs with all the requirement checks and monitoring of those programs and the redundant government officials and employees that that requires.

  14. [14] 
    C. R. Stucki wrote:

    Caddy [11]

    Re "Never mind the increased productivity . . etc"

    100 yrs ago, when productivity went up, much of it was because workers worked harder. In the industrialized age (and FAR MORE so in the High-Tech age), productivity increases represent almost exclusively, more capital investment (robotics) and more advanced technology. It almost NEVER represents unskilled labor "working harder".

    Those facts tend to cause the rewards of higher productivity to accrue to the investors, the inventors, the programmers, the technicians, etc.

    The laws of economics are far more about "facts" and "reality' than about "fair", or "compassionate". (Perhaps that's why the world thinks it needs Democrats.)

  15. [15] 
    nypoet22 wrote:

    well that's unfortunate. but in this case don's right, a price floor for labor is far short of what's needed to address our society's massive inequity. for the past forty years wealth has been redistributed upward by a system that lets billionaire hedge fund managers pay half the tax rate of cops, teachers and nurses.

    JL

  16. [16] 
    nypoet22 wrote:

    and lest we think that it's just the left and socialists who think this way:

    https://thefederalist.com/2021/02/25/the-right-can-do-better-than-freeing-markets-to-sell-human-flesh/

  17. [17] 
    ListenWhenYouHear wrote:

    CW,

    Maybe your suggestion of making it a permanent COLA instead of a fixed amount would make it have the particular effect on the budget necessary to be included??? Don’t fully understand the particulars for what does and what doesn’t qualify as “effecting the budget” to know for sure.

    This might sound like an overly simplistic statement, but I think that one of the biggest causes for the political division in this country is because our Congress has forgotten how to work together to pass good legislation. Today, Members of Congress spend less time working together in the halls of Congress than past Congresses were required to do. They have made spending as little time at their jobs their focus and a priority.

    The GOP in 2008 made opposing any piece of legislation that Obama supported their main plan for making him a one-term loser! The Tea Party members made making concessions with Democrats an unforgivable offense... an act of TREASON! Except for Republicans who were elected to Congress prior to 2008, those elected since then have almost no real experience of working with others.

    Sadly, of the few bipartisan pieces of legislation that have been signed into law since 2008, most were created entirely by lobbyists and only required the members of Congress to sign their names to it — that was the extent of their participation in creating the legislation! If they are not forced to do the work necessary to hash out the fine points of legislation that both parties can support, “compromise” will continue to be viewed solely as a sign of weakness.

    Supreme Court Justice Sonia Sotomayor shared in an interview with Trevor Noah at how disappointed she was to walk by the Senate and see that only those who were giving a speech were present in the Senate while it was in session. Those speaking were speaking to the C-Span camera and a handful of various staff members running in and out of the room. It used to be that when the Senate was in session, the Senators had to be IN the Senate to know what was going on. Now Senators believe that it is a waste of their time to have to sit through these speeches when they have hired staff to watch for them and then cut them the clips of anything said that they need to hear! This permits the Senators to focus on what is important: raising money for their Party!

    The average freshman member of Congress spends 30 hours a week seeking money from donors. If they work 10 hour days, five days a week, that means only 2 days out of the 5-day work week are spent doing the job that their constituents elected them to do! This means that the majority of their time is not spent working with other Senators. It means that their main focus is on their own survival and not on doing what is best for their constituents.

    I believe the filibuster has historically been used only to protect Jim Crow measures and to prevent Civil Rights legislation from getting a vote in the past, and today is still the weapon best used by the party of white nationalists! It should become a relic for history books to pass judgement on ASAP!

    But if the Dems cannot force themselves to get rid of it, then at least they should make those choosing to block the vote to have to earn their filibustering — require the minority filibuster to have an audience of 20 Senators in the chamber listening to what is being said for the entire length of the filibuster. If only 19 are present, the filibuster is over! This allows those who feel strongly enough in their opposition of a bill an opportunity to demonstrate just how far they will go to block the bill.

  18. [18] 
    MtnCaddy wrote:

    This is a funny vid from my Fellow Travelers at The Lincoln Project

    Qdroxychloroquine®

  19. [19] 
    MtnCaddy wrote:

    [13]

    Agreed on the BMI (aka UBI, Yang style.) I see this as an eventuality, -- with or without a second American Revolution against this two-party system that doesn't serve 90% of us. Automation (as much as NAFTA etc) has doomed the Average Joe in America. Just wait until millions of truck drivers are dumped once robotic trucks can drive themselves, never mind all the manufacturing jobs lost since Reagan.

    Agreed on the fact that both parties are right-of-center Corporate whores for the rich, who distract is with the fight over social issues.

    Agreed with That vast majority of citizens will still want to work to improve over basic minimum survival.

    If you have a link that addresses the cost of BMI versus the existing programs you mentioned, please post it. You raise an excellent point about BMI being a complete substitute for Social Security.

  20. [20] 
    Kick wrote:

    MtnCaddy
    10

    Wouldn't it be a hoot if QAnon was a creation of a foreign adversary? Maybe Russia, the Chinese or Iran (payback for Stuxnet?)

    Would you believe South Africa? You should.

  21. [21] 
    Kick wrote:

    ListenWhenYouHear
    17

    I like the way you think. :)

  22. [22] 
    MtnCaddy wrote:

    [14]

    CRS wrote,

    In the industrialized age (and FAR MORE so in the High-Tech age), productivity increases represent almost exclusively, more capital investment (robotics) and more advanced technology. It almost NEVER represents unskilled labor "working harder".

    Those facts tend to cause the rewards of higher productivity to accrue to the investors, the inventors, the programmers.

    You make an excellent point! I have a Business School background (plus Fine Arts, History and Liberal Arts) and I have NO RATIONAL CHOICE but to be 100% with you on this point. Those that risk their money/capital MUST reap the reward when they've invested wisely. Otherwise there is NO incentive for anybody to do anything, period. Full stop.

    K? Having acknowledged this I wonder if our point of POTENTIAL DISAGREEMENT might lie more in the area of "How shall the (rightfully rewarded Capitalists) be properly TAXED? How might we help the working consumer to be able to buy what they helped to manufacture?" Henry Ford paid his employees more than market wages so that they could buy what they assembled.

  23. [23] 
    MtnCaddy wrote:

    [20]

    Kick I have more than enough respect for you that I ask you to Kicksplain, why South Africa? Why would they want to fuck with 'Murica?

  24. [24] 
    MtnCaddy wrote:

    Okay... Let's try this again, Qhydroxychloroquine

  25. [25] 
    Kick wrote:

    MtnCaddy
    23

    South Africa for no particular reason other than the origins of QAnon can be traced there to a right-wing conspiracy theorist peddling white grievance, xenophobia, and white genocide. It was then amplified by others as a means to separate uneducated follower types from their money.

    So much of the right-wing drivel and spew is for the sole purpose of grifting off the gullible masses and turning their hatred and anger of "the other" into a money-making enterprise for themselves. It's sad to watch the goalposts move and the rubes follow right along. Next move: March 4... when Donald Trump will not be sworn in as president in Washington, DC. And just like January 6 and surrounding dates, the rates at Trump's DC hotel have been increased for March 4 and surrounding dates.

    You can't make this shit up. Oh, wait... yes, you can... and the angry mob/QAnon cult will swallow it whole like junkies in search of the next fix.

    https://www.newsweek.com/qanon-march-trump-president-1567525

    Keep those goalposts moving... milk those morons for every cent. Trump U.

    Just so you know, you're mic is always on. :)

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