The Forgotten Man on the Minimum Wage Issue

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Congress
seems almost certain to pass an increase in the minimum wage this
year. After capturing both houses of Congress in the 2006 midterm
elections, Democrats have made passage of a minimum wage increase
a high priority. Both the Senate and the House have passed bills
already, although differences between the two houses will require
a conference committee.

Raising
the minimum wage will harm workers whose productivity does not warrant
a wage increase. They will lose their jobs, work shorter hours,
or be forced into uncovered sectors of the economy. Welfare recipients
seeking jobs will be even less attractive to employers than they
are now. Only those workers who retain their jobs will be better
off with a wage increase. As the Nobel Prize-winning economist George
Stigler once put it, better forty hours a week at $5.15 an hour
than zero hours at $7.25.

Raising
the minimum wage is bad public policy for another reason, however.
The minimum wage provides a classic instance of what William Graham
Sumner called "the forgotten man" in his classic work,
What
Social Classes Owe to Each Other
:

The type
and formula of most schemes of philanthropy or humanitarianism
is this: A and B put their heads together to decide what C shall
be made to do for D. The radical vice of all these schemes, from
a sociological point of view, is that C is not allowed a voice
in the matter, and his position, character, and interests, as
well as the ultimate effects on society through C's interests,
are entirely overlooked. I call C the forgotten man. (Sumner,
p. 65)

On
the minimum wage issue, policy analysts and politicians who want
to reduce income inequality put their heads together and decide
what employers will do for employees. The "forgotten man"
in this case is the businessman, targeted by policy-makers simply
because he has more income than the unskilled worker. He has all
the classic characteristics of the forgotten man in Sumner's formulation;
he is "worthy, industrious, independent, and self-supporting.
He is not, technically, u2018poor' or u2018weak'; he minds his own business,
and makes no complaint. Consequently the philanthropists never think
of him, and trample on him." (Sumner, p. 66.)

Of
course, as any political observer will tell you, business lobbies
are not really forgotten. In fact, they are never without a voice
in Washington. Throughout the long history of the minimum wage,
businesses have consistently been organized in opposition, while
low-income workers almost always fail to mobilize. When the political
conditions are ripe, however, as they are now — a Democratically-controlled
Congress, stagnating median income, and a minimum wage that hasn't
been raised in ten years — the political clout of small business
lobbies essentially evaporates. Even Republicans will desert the
small businessman, as can be seen from the 94–3 margin by which
the Senate passed the minimum wage bill in February.

Passage
of some minimum wage increase appears to be inevitable this year.
Congress should provide tax relief sufficient to offset the costs
of the minimum wage increase to small business. The Senate bill
includes $8.3 billion in tax relief for small business; the House
bill includes no such provision. President Bush has indicated that
he will only sign a bill increasing the minimum wage if the legislation
includes some tax relief for small business. He should keep this
promise to the forgotten man.

March
21, 2007

Michael
Hayes [send him mail]
is professor of political science at Colgate University. He is the
author of three books, including (most recently) The
Limits of Policy Change: Incrementalism, Worldview, and the Rule
of Law.

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