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Fed Head: Don’t Worry, Raising Minimum Wage Won’t Raise Inflation, Labor Costs |
Another argument against raising the minimum wage was shot down yesterday. Who did the shooting? None other than Federal Reserve Board Chairman Ben Bernanke, President Bush’s hand-picked choice to be the nation’s guru of all things economic.
In a letter to Rep. Ginny Brown-Waite (R-Fla.), Bernanke said that labor costs and inflation would not be adversely impacted if the minimum wage were raised. We’ve all heard the cries from the business community and Republican opponents of raising the minimum, including the Bush administration, that to do so would cost employers so much that they would have to lay off workers and raise prices.
Says Bernanke:
A modest increase in the minimum wage would likely have only a small effect on labor costs for the economy as a whole and therefore a small effect on overall inflation.
The Fed chief didn’t stray so far from the Bush party line that he endorsed raising the minimum wage. While admitting there was “disagreement” among economists about the effect an increase in the minimum wage would have on jobs and the economy, he called it a “controversial” issue among economists.
Controversial as in paying people enough so that if they work full-time they’re not living in poverty?
Controversial as in raising a minimum wage that has been stuck at $5.15 an hour for nine years?
Controversial as in raising a minimum wage that is at its lowest buying power in more than half a century?
Bernanke is missing what’s really the controversy:
- Republican congressional leaders who have blocked every attempt since 1996 to raise the minimum wage, no strings or poison pill legislation attached.
- Nine congressional pay raises totaling more than $35,000 a year since the last time the minimum wage was raised.
- Republican congressional leaders attempts to pass a $753 billion millionaire estate tax cut for the Paris Hiltons and Wal-Mart heirs of the world by adding a token minimum wage increase, that would have actually cut the pay for some workers who earn tips.
While economists and lawmakers continue to dither and dance, union and community activists are telling state and federal legislators: America Needs a Raise. The AFL-CIO mobilization is pushing minimum wage increases through ballot initiatives and legislation in nearly two dozen states.
Just last week, one day after the 10th anniversary of President Bill Clinton’s signing of the last minimum wage increase, and after years of advocacy by the California union movement, minimum wage workers in that state won a pay raise. After twice vetoing minimum wage bills, Gov. Arnold Schwarzenegger (R) felt the election year heat and agreed to a sign bill that will boost the state’s minimum wage to $8 an hour by 2008.
Other recent legislative wins to give minimum wage workers a raise have taken place in Massachusetts, North Carolina and Pennsylvania.
When Congress returns to work next week, more action may take place on minimum wage legislation, including bills by Sen. Edward Kennedy (D-Mass.) and Rep. George Miller (D-Calif.). Read the recent report from the House Education and Workforce Committee’s minority staff on Republican “poison pill” maneuvers to kill minimum wage legislation.
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