Obama's Minimum Wage Fallacy

Obama's Minimum Wage Fallacy

By Derrick Wilburn

Over the past few weeks President Obama has been on a tour of the nation making speeches and amping-up the rhetoric in his efforts to raise the federal minimum wage.  As is typical for this president, he has done as much as he can “on his own” (presidential speak for governing via the issuance of Executive Orders.) On February 12, 2014 the President issued an Executive Order requiring the minimum wage to be paid employees of companies doing contract and sub-contract work with the federal government be raised to an initial $10.10 per hour. “Initial” being a key word in the previous sentence. The exact wording of this XO leaves the door wide open for future pay hikes:

“Sec. 2. Establishing a minimum wage for Federal contractors and subcontractors.  …shall be at least

(i) $10.10 per hour beginning January 1, 2015; and
(ii) beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor”

Yes, the $10.10 per hour is just a beginning. After that it’s apparently an amount to be determined at the discretion of whatever the Labor Secretary believes to be “fair.” We do not know who will be the Secretary of Labor come 2016 but it’s reasonable to assume it will be an individual who shares the President’s and Thomas Perez’s (current Secretary of Labor) fundamental views on the “fairness of pay.” Indeed all of this President’s cabinet positions are occupied by far-left-of-center ideologues; it is inconceivable that if a change were to be made, he would fill this seat with someone who may side with employers over employees. (In other words, federal contractors, get ready to shell out even more come 2016.)

Federal contractors having been dealt with via XO, the President is now is forced to deal with the pesky obstacle of our constitutional legislative bodies, the U.S. House of Representatives and Senate, in order to realize his vision of raising the federal minimum wage for all employers and not just those getting a check from the Department of the Treasury to make or help make payroll.

In the aforementioned tour stops, the President continues to state, “Raising the minimum wage will lift millions out of poverty,” most recently before a fawning audience at the University of Michigan. While the constant mantra of “everybody deserves a fair shot” and “we don’t believe in opportunity for just a few at the top” are great for soliciting crowd response, the issue here isn’t how loud you can get a gathering of college students to yell, it’s what are the real-world truths and what policy tact should we pursue in order to legitimately help America’s laborers? The data simply does not support the notion that raising minimum wage lifts people at the bottom of the economic ladder out of poverty. In fact, it does the opposite. Poverty does not drop with minimum wage hikes it increases dramatically every time the minimum wage is raised.

First there's the ‘non-factual-analysis-common-sense’ test of this. Raising the minimum wage from its current $7.25 to $10.10 per hour would be a gross increase of $2.85 per hour before taxes and other deductions. If we assume zero deductions and a 35 hour work week, $2.85 x 38 hours = a weekly increase of $99.75. Again, not taking any deductions into account.  About one hundred additional dollars a week is going to "lift a family out of poverty"? The very notion is ridiculous and the statement an insult to any thinking person's intelligence.

The statistical and factual analysis makes the President's statement even more ludicrous.

The Fair Minimum Wage Acts of 2007 and 2012 have raised the federal minimum wage by 70 cents per hour, three times. In 2007 the minimum wage was $5.15 per hour, in 2008 it was raised to $5.85, in 2009 to $6.55 and in 2010 to $7.25.

According to the U.S. Census Bureau and U.S. Dept. of Labor;
- in 2007 there were 37.3 million people living in poverty
- in 2008 39.8 million
- in 2009 43.6 million, and
- in 2010 46.2 million

In 2012 the Census Bureau reported the number living at or beneath the federal poverty threshold (individual filing singularly, $11,670/annual income; couple filing jointly $15,730) rose to 46.5 million. (2013 numbers are not out yet.) Raising the minimum wage seems to put people -- millions of people-- into poverty.  

Considering the number of times the President has made this statement (that “Raising the minimum wage will lift millions out of poverty”), we are left with two possibilities. Either our President is ignorant of these facts, or, he is not ignorant of them at all but is intentionally lying to advance an agenda that will add to the woes of the poor.

I choose to believe the latter. The fact is that most in this nation are not aware of this adverse relationship between minimum wage hikes and numbers living in poverty. Stating, “We need to raise the minimum wage to help the poor” sounds good. Therefore there is little political risk in continually making this false claim. In fact not only is it not politically risky it’s actually quite politically shrewd. The perception that Democrats are in favor of the poor and underclasses and Republicans favor the wealthy and upperclasses is quite real, alive and well. A Democrat President running around the nation banging the "raise the minimum wage to help the poor" drum only adds to the misconception that he and his political party are the one's "looking out for" those in lower economic classes. As just demonstrated, it’s the polar opposite of the truth but a masterstroke of manipulating the ignorant masses.

Not only does the President sell the “I’m looking out for the little guy” myth but in each of these stops and speeches he’s careful to demonize Republicans in congress for their opposition to minimum wage increases. Screaming about Republican resistance to raising the minimum wage advances the other misconception about Republicans only caring for the rich and looking out for big business. “They don’t want to see the little guy get ahead, they’re only concerned with protecting the one percent.”

It’s a shame that we have a President so willing to divide our nation and a greater shame that he’s do so using completely false information. Not misleading, not half-truth – false. By opposing minimum wage hikes the Republicans are actually the ones protecting millions from falling into or deeper into poverty; by supporting such hikes the Democrats are dooming the poor. And our President is preying on the ignorance of those very same impoverished and working poor to try and assure they stay that way. After all, who cares if they’re perpetually poor so long as they’re perpetually voting Democrat?

Derrick Wilburn www.blackandconservative.com