5 Right-Wing Myths About Raising the Minimum Wage, Debunked (Part I)

January 30, 2014
The Contributor

If the 1968 federal minimum wage had kept pace with inflation it would be $10.75 today. But it is only $7.25, an amount so low that many full-time workers need such government assistance as food stamps and Medicare just to get by.

There is a bill before Congress and endorsed by President Obama that will raise the minimum wage to $10.10 an hours and “index” it to inflation in the future. That means the wage will increase as inflation increases so it never falls behind again. Meanwhile there are reports that President Obama is considering using executive action to raise the minimum wage for employees of federal contractors.

Corporations like Walmart and McDonald’s like the current situation of really low wages at the bottom because it puts more into the pockets of those at the top. So the corporate/conservative machine is grinding out propaganda against raising the minimum wage. Here is a look at five of the most common propaganda points they’re trying to trick us with.

1. Myth: Only teenagers make the minimum wage.

A common conservative myth, repeatedendlessly, is that only teenagers earn the minimum wage; that it’s a “starter wage” and people quickly move up to a better wage as they gain experience.
There may once have been a time when most people who earned the minimum were teenagers in starter jobs. But times and the structure of our economy have changed for the worse. According to the Economic Policy Institute, “87.9 percent of those affected nationally by increasing the federal minimum wage to $9.80 are 20 years of age and older. The share of those affected who are 20 or older varies by state, from a low of 77.1 percent in Massachusetts to a high of 92.4 percent in Florida (and 93.9 percent in the District of Columbia).” Also, “more than a third (35.8 percent) are married, and over a quarter (28.0 percent) are parents.”
Notably, 49 percent of people making the minimum wage are adult women.

2. Myth: A minimum wage is “government interference” that just distorts the market. If there are lots of people looking for work, then wages should fall.

The problem with this myth is that we live in a consumer economy and a consumer economy does better when more people and businesses have more money to spend. In other words, the economy rises and falls based on how much demand there is for the goods and service that our companies provide.

When the economy slows and people are laid off this increases the supply of people looking for jobs which causes wages to fall. As wages fall, demand falls because people have less to spend and the economy slows even more. So even more people get laid off, putting even more downward pressure on wages. This can become a death spiral for an economy.

This is why government action is so important. A minimum wage provides a floor to how low wages can fall. Every business watches out for itself and lowers wages when they can. But when every business is lowering wages it hurts every business. So while all businesses are engaged in the task of watching out for themselves government has to be there to watch the big picture and step in when necessary.

A second problem with this short-term market thinking is that it gives businesses a financial incentive to use their influence to push policies that keep unemployment high, thus forcing down wages. Senate Republicans filibustered the Bring Jobs Home Act and the American Jobs Act as just two of more than 400 filibusters in recent years, helping to keep unemployment high. Companies that are fighting what they call “government interference” so they can continue to pay low wages are cutting their own throats because they are really causing their own customers to have less to spend.

3. Myth: Raising the minimum wage costs jobs.

This is one place where conservative ideology is clearly refuted by looking at what actually happens. When you have states next to each other, and one raises the minimum wage while the other does not, you can compare the results.

It might seem obvious to people that raising wages will cause companies to hire fewer people. But not when you think it through. Well-run companies employ the right number of people to handle the demand for the goods or services they produce. They don’t just have extra people sitting around reading the newspaper, who they will lay off if they have to pay a couple of dollars more an hour.

Picture a store with only one cashier and 20 people in line. Pretty soon people get impatient and leave. A sensible manager is going to put the right number of cashiers at the checkout lanes to handle the number of customers in the store.

In Australia the minimum wage is $16.68 and the unemployment rate is 5.8 percent. In the U.S. the minimum wage is $7.25 and unemployment is down to 6.7 percent, but is falling largely due to people leaving the labor force because they just can’t find work. This is not to say that the unemployment rates in Australia and the U.S. are different because of the difference in the minimum wage, but it does show that the high Australian minimum wage has hardly crashed Australia’s economy.

4. Myth: Raising the minimum wage hurts blacks, Latinos, fill in the blank.

Many conservatives play a propaganda trick by claiming that raising the minimum wage hurts the very people liberals want to help. Fox News’ Art Laffer called the minimum wage the “Black Teenage Unemployment Act.” At far-right Townhall, Walter E. Williams claimed that “increases in the minimum wage at both the state and federal level are partially to blame for the crisis in employment for minority young adults.”

This claim uses a core misconception as its underpinnings, that increasing the minimum wage costs jobs. Since (fill in the blank) group faces high unemployment, raising the minimum wage shows you are a hypocrite because all you are doing is costing (fill in the blank) jobs. But this is as false as saying that raising the minimum wage takes away jobs.

Continued in part II..