Senate Majority Leader Harry Reid is prepared to move the minimum wage bill in the Senate this week. The Hill reports, Reid sets up vote for minimum wage increase:
Senate Majority Leader Harry Reid (D-Nev.) moved to hold a vote this week on increasing the federal minimum wage.
Reid filed cloture on the motion to proceed to S. 2223, a bill from Sen. Tom Harkin (D-Iowa) that would increase the minimum wage from $7.25 to $10.10 an hour. The vote could come as early as Wednesday.
The vote will be a major test of unity for Senate Democrats, who have made the wage hike central to their populist agenda for the midterm elections.
Some vulnerable Democrats up for reelection have expressed concern about the wage increase, citing a [disputed] Congressional Budget Office report that Harkin’s bill would harm job growth. [The Effects of a Minimum-Wage Increase on Employment and Family Income (.pdf). The CBO report actually confirmed that increasing the federal minimum wage to $10.10 will lift 900,000 people get out of poverty.]*
If Democrats stuck together, they’d need at least five Republicans to vote with them to
advance the measure break the GOP filibuster. [Tell Senators John McCain and Jeff Flake that “Americans have earned a raise!”]
But Republicans are unified against it, which has put pressure on Democrats to minimize defections in their 55-member caucus.
Most Democrats are insisting on the $10.10 wage level because they say it would lift all full-time workers out of poverty.
Republicans don’t care about those in poverty, Reid [said], because it doesn’t help their “billionaire benefactors,” businessmen David and Charles Koch.
“Apparently the Kochs think $10.10 an hour is too much,” Reid said. “They refuse to allow millions of Americans the opportunity to get out of poverty.”
Even if Democrats get enough votes to raise the minimum wage and index further increases to inflation, the House leaders are unlikely to allow a vote on the bill.
* The CBO report from February asserted that 500,000 low wage workers would lose their job from raising the minimum wage, yet 900,000 would be lifted out of poverty. The CBO report is contrary to decades of research on the minimum wage by the Bureau of Labor Statistics, and recent meta-data academic research. I posted about this previously. Raising the minimum wage ‘has little or no discernible effect on the employment prospects of low-wage workers’:
I posted earlier this year about a report from the Center for Economic and Policy Research, a meta-data rich report on the minimum wage entitled, “Why Does the Minimum Wage Have No Discernible Effect on Employment?” PDF. From the press release:
A new paper from the Center for Economic and Policy Research finds that modest increases in the minimum wage – such as the one proposed by President Obama in his State of the Union address – have little impact on employment, due to adjustments by employers and workers. The paper, “Why Does the Minimum Wage Have No Discernible Effect on Employment?” by economist John Schmitt reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. It finds that the strongest evidence suggests the most important adjustments are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners (“wage compression”); and small price increases.
“This is one of the most studied topics in economics, and the evidence is clear: modest minimum wage increases don’t have much impact on employment,” Schmitt said. “An increase to $9.00 per hour would be hugely important for the workers getting it, but the idea that this would lead to less employment is just not supported by the evidence.”
President Obama’s call for a minimum wage rise to $9.00 an hour would be a modest increase, and would keep the minimum wage below its peak, when adjusting for inflation. As CEPR’s Dean Baker and Will Kimball noted in a blog post yesterday, “The purchasing power of the minimum wage peaked in the late 1960s  at $9.22 an hour in 2012 dollars. That is almost two dollars above the current level of $7.25 an hour.” They also noted that the minimum wage has not kept pace with productivity increases over the past 44 years, as it had from 1947-1969 – a period when economic “[g]rowth averaged 4.0 percent annually” and “the unemployment rate for the year 1969 averaged less than 4.0 percent.” But the link between productivity growth and minimum wage ended in the 1970s.
Baker and Kimball note that “If the minimum wage had kept pace with productivity growth it would be $16.54 in 2012 dollars.”
Schmitt’s paper notes that “two recent meta-studies analyzing [scores of separate studies] conducted since the early 1990s concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers.” The paper concludes that the most likely reason for this is that “the cost shock of the minimum wage is small relative to most firms’ overall costs and modest relative to the wages paid to low-wage workers.”
The paper notes that employers have many channels of adjustment to a minimum wage increase, including reducing hours, non-wage benefits, or training; shifting the composition toward higher skilled workers; cutting pay to more highly paid workers; taking action to increase worker productivity (from reorganizing production to increasing training); increasing prices for consumers; or firms simply living with a smaller profit margin.
* * *
Other studies have reached the same conclusion, What Really Happens When You Raise The Minimum Wage:
There is also real world evidence that minimum wage increases don’t hurt jobs. David Madland and Keith Miller analyzed minimum wage increases at the state level over two decades and “found no clear evidence that the minimum-wage increases affect aggregate job creation when unemployment rates are high.” After looking at the increases during times 7 percent unemployment or more, the rate actually declined 52 percent of the time and in a few cases remained unchanged. The authors also point to five other studies that did the same state-level analysis while controlling for other factors that could impact employment and similarly found “no discernable effect on employment levels.”
At a time of the greatest wealth disparity since before the Great Depression, it is indefensible that the GOP would defend the right of Plutocrats to squeeze a few more dollars out of the increased productivity of their workers rather than share the benefits of their hard-earned productivity with their workers with a pay increase.
The $10.10 per hour minimum wage is still less than the adjusted for inflation in 1968 dollars amount of $10.86 per hour [see the Bureau of Labor Statistics’ Consumer Price Index inflation calculator.] A GOP filibuster of this minimum wage bill is morally depraved.