A Bad Bargain
Adam Ozimek has an idea for Republicans:
Here’s what they should do: offer a compromise to Democrats that passes a $15 federal minimum wage in exchange for cutting corporate tax rates.
Why would this deal represent a win for Republicans rather than just a compromise? Because regardless of the support it generates among fast food protestors and advocates, a $15 minimum wage would simply be untenable. The increase in unemployment would be swift and significant, and Democrats would be unable to deny it. The $15 minimum wage would be repealed very quickly in a bipartisan consensus.
Well, that’s certainly putting his money (or policy) where his mouth is, in terms of his opposition to raising the minimum wage.
The problem I see with the bargain is this: The effects of raising the minimum wage would be pretty unequally distributed. As would nixing the corporate income tax, though the effects there are harder to lay out.
High-wage, high-cost places would likely not feel the increased minimum wage nearly as much. Nowhere would it be less felt, for example, in Western Dakota. After that, you’d be looking at New York City, San Francisco, Seattle, DC and other Democratic strongholds where you can afford to raise the minimum wage somewhat because (a) basement wages are higher to begin with, (b) there is more money flying around, and (c) it’s more justifiable there because of the cost of living.
This is why I don’t have any objections – or predict much in the way of negative consequences – when high-cost cities choose to increase their minimum wage. To the extent that we’re going to have a minimum wage, it makes sense that the minimum wage have some sort of relationship to purchasing power.
But that’s also why I am critical of the likely consequences of a state-wide or nation-wide bump. If you raise the minimum wage in Washington, you’re raising it in Seattle and you’re putting Eastern Washington at a distinct disadvantage. There’s less money out there to pay people $10-15/hr, and cities like Pullman would be at a disadvantage compared to cities like Moscow, right across the Idaho border.
You can get rid of the state line problem by raising it nationally, of course, but the disparities become more stark. Having the same minimum wage in Mississippi as in San Francisco makes little sense. The positive effects are more likely to hit the latter, the negative effects more likely to hit the former.
That’s a policy problem, but it’s also a political one. If the positive effects are felt primarily by the constituents of one party, and the negative effects felt primarily by the other, it’s hard to get that bipartisan consensus to repeal it. At the least, there would likely be enough support for it to hold the minimum wage where it is while inflation catches up to it. Which leaves some states better off and some states worse off (and I think this is an optimistic assessment, when we’re talking about $15/hr), if you represent the latter, you’re not doing your job if you sign on to this bargain. Especially when (by my seat-of-the-pants assessment) the benefits of the corporate tax elimination would primarily go to wealthy and blue states (and Texas).
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