

Black: We need new ideas to fight poverty (column)

If not a minimum wage hike, then what?

11:28 AM, Aug. 29, 2013  |  Comments
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In the wake of the 50 year anniversary of the March On Washington, the occasion when Martin Luther King, Jr. gave his famous "I Have A Dream" speech, it's worth noting a couple of things. First, it was actually known at the time as the March On Washington For Jobs And Freedom. Second, its goals included a call to raise the federal minimum wage to $2 per hour. This is an idea that should be considered seriously.

Adjusted for inflation this would be about $15 per hour in today's prices, more than double the current hourly minimum wage of $7.25. Is this too high? Some argue - perhaps correctly - that a too-high minimum wage would have a negative impact on the employment rate of the population it was trying to help. Simple theoretical economics suggests this is the case, although empirical studies are more mixed on this question.

But the important question isn't whether or not we raise the minimum wage. Instead, the important question is just what is the best way to alleviate poverty in this country? We have a patchwork of federal, state and local programs which are often costly to implement. Much money is spent that doesn't directly benefit the people it is intended to benefit. Increasing the minimum wage might have some costs, but so do other anti-poverty programs.

The extent to which people feel free to demonize the poor shocks me. Many poor people are, in fact, working poor. "Makers vs. takers" rhetoric elides the fact that most "takers," aside from retirees, are actually the working poor. They might benefit somewhat from miserly government programs with sharp income and asset qualification tests, but they're still working.

The fact is that you can work hard, very, very hard and very, very long, in an economy in which significant numbers of jobs pay at near-minimum wage levels and still be poor. Lots of people do this. While a few states and municipalities set it at a higher level, most employers are subject to the federal minimum wage of $7.25 per hour. Working 40 hours per week for 52 per weeks per year, without vacation or sick leave, this provides $15,080 of pre-tax income. This would put this hypothetical worker above the defined federal poverty line, but I think this says more about the federal poverty line than the affluence of this worker. And, of course, there's no guarantee such workers can actually work full-time equivalent hours.

If I ran the country I'd implement "crazier" ideas than a higher federal minimum wage. Specifically, I'd enact a guaranteed, if small, minimum annual income for all adults. A crazy idea, perhaps, but a crazy idea which would help to alleviate poverty while reducing the cost of other parts of our stingy welfare state.

But my crazy ideas are probably less politically possible than boosting the federal minimum wage. I'll acknowledge its potential costs, but opponents should offer their own solutions, crazy or not, for boosting the incomes of the working - and willing to work - poor. I'm open to better suggestions for helping the working poor, as long as they come from people who are genuinely interested in helping the working poor.

So if not boosting the minimum wage, then what? People who either work hard or who are willing to work hard should not face a marginal existence with near poverty incomes. The high unemployment rate has exacerbated their plight, but it is not the sole cause. King's dream involved boosting the incomes of the less fortunate. As we pay respect to that historical moment, we should also pay respect to its ideals and figure out how to turn the dream into reality.

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