Wage campaigners blow horns at Congress' wall, but will it crack?

WASHINGTON D.C.—On a cold, gusty morning in the nation’s capital this week, Reverend George Gilbert Jr., the pastor of Holy Trinity United Baptist Church, took to invoking a Biblical parable to call for raising the city’s minimum wage.

Gilbert Jr., speaking to the shivering crowd assembled around him in front of the stately offices of the D.C. Mayor and City Council, told the story of Joshua, the leader of the Israelites, who marched around the walls of Jericho with his army for six days. On the seventh day, on their seventh time circling the city, the soldiers blew their trumpets so hard that the walls came crashing down.

Gilbert urged the labor activists and organizers around him that it was time to blow their horns—to collect 23,000 signatures and put the measure to raise the minimum wage to $12.50 in front on the ballot next November so D.C. voters could decide for themselves.

“There’s good news,” Gilbert boomed, sounding every bit the Baptist preacher. “We’re going to have an army of soldiers collecting signatures and they’ll be marching around the walls of big business and big politics and when the people—when the residents—when they sign the petitions and make a noise, the walls of the overworked and underpaid will come falling down.”

“The walls of ‘not enough money to pay my rent’ will come falling down,” Gilbert said. “The walls of ‘no one in the mayor’s office or the city council is listening’ will come falling down.”

“Can’t survive on $8.25,” rally-goers chanted in response. “Stand up. Fight back.”

Michael Delvone, the executive director of Working Families, a group formed specifically to push for a minimum wage increase in the District, told those assembled, “Hold on, the cavalry is coming.”

Another organizer disagreed. “You are the cavalry,” he said. 

Similar scenes have played out across the country over the last year, as states, cities and municipalities have decided that $7.25 an hour—the federal minimum wage that was passed in 2007 and amounts to a salary of about $15,000 an year—is insufficient, particularly for low-wage workers who are supporting households.

Nineteen states and D.C. had minimum wage levels higher than that in 2013, according to the National Conference of State Legislatures, with 12 states instituting new increases beginning in 2014, including New Jersey, Oregon and Washington State. Some municipalities, too, are experimenting with imposing even higher minimums, including SeaTac in Washington State, where the votes on an initiative to pay workers in certain industries at least $15 an hour is awaiting a recount.

Moreover, polls show that a modest national hike has broad public support—three quarters of Americans support an increase to $9 an hour, according to a recent Gallup poll.

But are the horns of activists and low-wage workers reaching members of Congress?

Sen. Tom Harkin, D-Ia., and Rep. George Miller, D-Calif., are still plotting the legislative strategy for the Fair Minimum Wage Act of 2013, introduced earlier this year. Their bill would raise the rate to $10.10 in two years and permanently tie it to the rate of inflation. The White House has thrown its support behind the measure—about a dollar higher than what President Obama originally proposed in his State of the Union earlier this year.

Miller and Harkin argue that $10 is near where the minimum wage would be if it had kept up with inflation since 1968, when the rate was at its peak buying power.

In an interview with Al Jazeera, Miller said that although he is encouraged by efforts at the state and local level, it’s clear a federal response is becoming increasingly demanded. Approximately 30 million minimum-wage employees would receive a raise under his proposal, 88 percent of whom are adult workers.

“To have a checkerboard response on wages does not address the full needs of the national economy and doesn’t address the subsidies that go into companies like Walmart,” Miller said, noting that when large corporations do not pay workers adequate wages, taxpayers foot the billthrough public assistance programs, like food stamps and housing support. “These stores are large enough, they’re making huge profits and it’s time for them to quit leaning on the government.”

Part of the problem is that although the minimum wage issue is one of the must-studied topics in labor economics, economists still have not been able to come to a definitive conclusion on what happens when the minimum wage is raised.  

“It’s still a hard thing to pin down because there’s so much going on in the economy, so just trying to say what’s the effect of this when there’s a million other things happening—to actually pin it down is tricky,” said Heidi Shierholz, an economist at the left-leaning Economic Policy Institute.

Over the last few decades as the methodologies of various studies have improved, economists have generally agreed that minimum wage increases do not have a significant impact on employment. Studies show that raises in minimum wages do not cause firms to start laying off workers, although how it affects a low-wage worker’s ability to find a job is more murky.

John Schmitt, senior economist at the Center for Economic and Policy Research, outlined in a paper earlier this year the most common ways firms compensate for higher labor costs after a minimum wage increase, including improving efficiency, reducing the wages of more highly-compensated workers, and small price increases. From reviewing the literature, Schmitt found little conclusive evidence that employers cut hours or benefits.

Shierholz said that no minimum wage increase has plunged an economy into chaos or calamity, as certain detractors would argue. In her view, a minimum wage increase may actually act as a kind of stimulus, taking money from corporate profits and putting it in the hands of low-income workers who are bound to spend the cash right away.

“In a time like this it’s exactly what we need,” she said. “Our recovery is being held back by weak aggregate demand.”

Conservative economists and Republican lawmakers take a dimmer view.

“The bottom line is the minimum wage goes up, some people are helped but there’s a cost and somebody has to pay that cost—it’s not free,” said Mark Lewis, a former Labor Department official under the Bush administration. “The question is who pays that cost?”

Lewis argued that it seemed a particularly bad time to increase labor costs for firms when the job market is already weak and any disruptions are unwelcome.

“Do you really want to do this now when small businesses are struggling in this economy, and when they’re now facing decisions on what to do with the Affordable Care Act and providing health insurance?” Lewis said. “It’s just a lot of issues swirling around raise my concern about whether or not this is a good time to do it.”

Michael Strain, an economist with the American Enterprise Institute, went one step further and said a minimum wage increase that applied to workers uniformly, whether they were 16-year-olds working a summer job or a heads of household, seemed a crude way to address the needs of the working poor. Strain suggested the Earned Income Tax Credit—a tax credit that already exists for low-income households—or a minimum wage that is tiered for different workers are better options.  

“Now is an especially bad time,” Strain agreed. “I think that we should be doing other things to help the working poor.”

Although backers of the Harkin-Miller bill are hoping for a Senate vote by early next year, the measure has no Republican co-sponsors in the Senate or the House, indicating the tough odds it faces even if the legislation makes it past committee.

“It’s highly unlikely that a minimum wage will go through the Congress,” said Ron Bonjean, a former aide to GOP House leadership. “Republican members believe the key to economic growth with a release on taxation and regulation, not an unreasonable mandate on small businesses that are just trying to make ends meet.”

Earlier minimum wage increases have passed Congress on a bipartisan basis, including the last time it was raised under President George W. Bush. Some GOP lawmakers in 2006 were even clamoring for the chance to vote for an increase. But times have changed. Powerful lobbying groups, including the deep-pocketed U.S. Chamber of Commerce and the National Restaurant Association, are opposed to any increases.

Jeff Hauser, a spokesman for the labor group AFL-CIO, said there was clearly an appetite around the country to get it done. Now it was a question of how many lawmakers’ feet could be provoked into staking out a stance and explaining it.

“Across America, this is a compelling issue. Despite huge amounts of money expended on the other side, there’s very broad public support for this,” Hauser said. “If you’re a member of Congress opposed to this, you want the issue ignored—you can’t win otherwise.”