Mo’ Money

Last week, the nation watched as the President gave his first State of the Union Address of his second term.

Regular readers will know that I was a strong supporter of the President’s fully funded American Jobs Act.  I could not have been more pleased to hear the bill return to the spotlight during last Tuesday’s address.

American Jobs Bill

As I’ve mentioned in a previous entry, the American Jobs Act would have created more jobs for my home state of Iowa alone than the Keystone pipeline would create for the nation.

In addition to Obama’s call for Congress to pass the American Jobs Act, he also proposed raising the federal minimum wage from $7.25 to $9.00 per hour.   Under different circumstances (a Bush Presidency for example), this proposal would have gained bipartisan support and would have overwhelmingly passed in the House and Senate as it did in 2007.  Not so much the case in 2013.  Whether it is a fully funded jobs bill or equal pay for women, the GOP majority is seemingly always against common sense legislation introduced by the current administration.

House Speaker John Boehner quickly attacked the proposal of raising the minimum wage, saying: “When you raise the price of employment, guess what happens?  You get less of it.”   This is simply bullshit.


Before Alan Krueger, head of President Obama’s Council of Economic Advisors, joined the administration, he worked on a study to determine if House speaker Boehner’s claim held any truth.

Working with his then Princeton colleague David Card, the two men surveyed hundreds of fast food restaurants in the New Jersey area after the state increased its minimum wage.  Comparing New Jersey restaurants to those in Pennsylvania, the two were able to determine if there was a reduction in New Jersey’s employment due to the wage increase.  Their conclusion:  There was no evidence of reduced employment due to the minimum wage increase.

During a study on the subject in 2011, the Center for Economic and Policy Research found: “The results for fast food, food services, retail and low-wage establishments in San Francisco and Santa Fe support the view that a citywide minimum wage can raise the earnings of low-wage workers, without a discernible impact on their employment.”

Another study by labor economist Sylvia A. Allegretto and Berkeley economics professors Arindrajit Dube and Michael Reich found that studies showing that minimum wage increases create teenage job loss lacked proper controls.  When the proper controls are introduced into the previous studies, the conclusions are far different: “Without spatial controls, the eight quarters prior to the actual policy change are all associated with unusually low (and falling) teenage employment, which provides strong evidence regarding the selectivity of states and the timing of minimum wage increases.  But when adequate spatial controls are included, there remains no discernible reduction in employment following the minimum wage increase.”

The Neumark & Wascher study analyzed by Allegretto, Dube, and Reich also happens to be one of the most popular studies conservatives use to validate the belief that increasing the minimum wage hurts jobs.

Just days after the President’s address, the Michelle Malkin-founded conservative site Hot Air posted a link to the original 2007 Neumark & Wascher study.

Michelle Malkin

As with the majority of issues, if the Republicans follow Boehner’s lead, they will find themselves in opposition with the American public.

A poll conducted by Lake Research Partners just last year shows the following percentage of groups favor a wage increase:

  • 91% of Democrats
  • 74% of Independents
  • 50% of Republicans (41% opposed)

The Public Religion Research Institute found in 2011 the majority of Americans favored an increase.  The two demographics who opposed an increase the most were members of the Tea Party and Fox News viewers (come on, nobody should be surprised by that).

The question now is: Will congressional Republicans continue their false scare tactics, or will they support legislation that will benefit 15 million American workers?  Like most issues the GOP struggles with, this one seems like a no-brainer to me.

House Speaker John boehner

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