Republicans ready to kill Obama’s minimum wage hike

President Obama wants to give the lowest paid workers in the country a raise. He intends to do that by significantly raising the federal minimum wage from $7.25 to $10.10 an hour.

It’s an understatement to say that such an increase is long past due. The value of the minimum wage in inflation-adjusted dollars has been declining for decades. Many people working full-time at the current minimum wage live in poverty. An individual working eight hours a day, five days a week, for 50 weeks makes about $15,000 a year. Factor in layoffs and periods of unemployment that are typical for those at the lowest end of the work ladder and that number can drop significantly. Who can afford to raise a family with that kind of income?  Nobody.

As it turns out, low-wage workers in Miami would benefit more from a rise in the minimum wage to $10.10 than workers in any other big city in the nation. The data for this conclusion comes from a study by the Brookings Institution, which found that the City of Miami ranks third in inequality among fifty large cities in the study. To put this finding in context, the United States is the leader in income inequality among all developed nations. Nowhere is economic inequality greater and more visible than in the big cities. New York City is a paradigmatic example. To rank third among large cities in economic inequality is dismal enough. But the bad news for Miami doesn’t end there. In other cities, high inequality results mainly from the fact that the rich are very rich compared with everyone else. In Miami, in the words of a Miami Herald article that reported on the study, the principal cause of the gap in incomes is that “the poor here are so very poor.” The Brookings findings reveal that in this city the poorest 20 percent of the population earned just $10,384 in 2012. That’s about half the national average for the poorest fifth.

This is why a significant rise in the minimum wage would make a bigger difference here than virtually anywhere else in the country. But the poorest of poor workers, who happen to live right here in what they call the Magic City, may be out of luck if Republicans in Congress, who have almost always balked at increasing the minimum wage, have their way. And this time, with an especially reactionary crop of Republicans in control of the House of Representatives and with enough votes in the Senate to use the filibuster to neutralize the Democratic majority, the GOP is confident that $10.10 will be dead on arrival at Capitol Hill. Indeed, since seizing control of the House, Republicans have demonstrated that they are able and more than willing to block passage of any progressive legislation.

This time the GOP is buttressing its shop-worn argument that increases in the minimum wage means fewer jobs with data from an unlikely source, the non-partisan Congressional Budget Office (CBO). The irony here is that Republicans have repeatedly lambasted the work of the CBO, most recently its findings on the economic impact of immigration reform and Obamacare. They have even called for abolishing the CBO. What is different this time is that a just-published CBO study estimated that a $10.10 minimum wage would reduce employment by 500,000. This provides excellent fodder for the GOP, which has been arguing that raising the minimum wage when unemployment is still high is folly.

But the Republican reading of the CBO report is predictably partial and biased. It’s an exercise in cherry-picking the one conclusion in the CBO report that supports their argument. Republicans and their allies in False (sorry Fox) News and other right-wing media fail to mention that the CBO report also concludes that $10.10 would raise the incomes of more than two million people above the poverty line.

Moreover, many economists believe that the CBO’s 500,000-job loss estimate is exaggerated. Their argument is two-fold. Historical experience shows that previous minimum wage increases have not resulted in loss of jobs. Indeed the contrary usually has been the case. In addition, they point to the increase in demand in goods and services that would result from low-wage workers with myriad deferred needs and consumption desires having more money in their pockets. Out of sheer necessity, poor people tend to spend their scarce money quickly. The rise in spending by low-income people would cause employers to increase their workforces and that would create a multiplier effect that would positively impact the whole economy.

Even hard-bitten capitalists like Henry Ford understood this logic. When he raised the pay of his workers to $5 an hour, at the time a salary way above the prevailing rate for assembly-line workers, Ford said he was doing it so his workers could afford the cars he was manufacturing. Recently, Walmart, hardly a paragon of corporate social responsibility, voluntarily announced a substantial increase in the base pay of its employees. This was no exercise in generosity. Many of Walmart’s customers are low-income consumers. By setting an example, Walmart is signaling that when low-wage workers have more money to spend, it helps its bottom line.

Yet none of these arguments, or even the fact that increasing the minimum wage is extremely popular, is likely to sway the hyper-capitalist fundamentalists that control today’s Republican Party. They have repeatedly shown they are able and more than willing to squelch any law that would introduce a measure of fairness to the economic system.

So why is president Obama engaging in what seems like an exercise in futility? He is doing it because he believes in the cause. Beyond that, he is doing it to force the Republicans to stand in the way of a measure that is immensely popular. In Florida, for instance, hardly the most progressive state in the union, the last time increasing the minimum wage was on the ballot, more than 70 percent voted yes approving it. That’s a landslide.

With the 2014 midterm election just around the corner, this is a major part of Obama’s answer to the GOP’s strategy of bashing Obamacare and focusing on the weakness of the economic recovery. Will it work? That remains to be seen. No matter, it’s great just to see Obama finally going on the offensive.