Why Liberals' $10.10 Minimum Wage Would Be a Much Bigger Risk Than Obama's $9

Liberal Democrats are trying to outdo President Barack Obama’s State of the Union proposal to raise the federal minimum wage from $7.25 to $9 by submitting legislation that would also link the minimum wage to inflation and set the floor at $10.10 instead.

Although the bill, introduced by Senator Tom Harkin of Iowa and Representative George Miller of California, would appear to be only slightly bolder than Obama’s $9 promise – after all, $1.10 an hour wouldn’t strike most workers as a huge raise – it represents a much more drastic expansion, because it would set the minimum wage higher than the prevailing wage for a few key occupations.

Obama’s suggested minimum wage hike was ambitious enough: it would have raised the federal rate to above the existing minimum wages for every state except for Washington, where the law currently provides for a floor of a $9.19 hourly rate. Given that many states with lower rates than Washington’s face weaker economies and labor markets, the measure Obama proposed likely would have raised wages above the prevailing rates for a significant number of workers. The theory that a binding minimum wage raises the welfare of workers and boosts the economy would have been put to the test, but on relatively limited basis. After all, $9 an hour is not that much, no matter where in the U.S. you live.

The difference between $9 and $10.10 an hour, however, is highly significant.

Consider that minimum wage earners are disproportionately young (under age 25) disproportionately working in in service industries. In other words, the workers most likely to be earning near the minimum wage are young fast food cooks, cashiers, and the like.

The average wage for fast foot cooks across the U.S.? Exactly $9. For cashiers, it’s $9.73.

So while Obama proposes to push the minimum wage right up to what these folks are earning (and beyond, in some states), Harkin and Miller want to raise the federal rate above the prevailing hourly wages in key low-wage occupations all over the country.

Given the fierce competition in such industries, what Harkin and Miller propose would be a much greater leap of faith in the minimum wage than Obama has committed to.

It’s understandable, then, why Obama would endorse a $9 minimum wage and yet balk at a $10.10 one.

 

Joseph Lawler is editor of RealClearPolicy. He can be reached by email or on twitter.

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