Raising the minimum wage has been anathema to conservatives and Republicans. What changed your mind?
For years I’d assumed increasing the minimum wage was not a good policy, but once I did focus on it, I was surprised how strong the evidence was. My article [on the conservative Daily Caller website] strongly backing a higher minimum wage was probably what got the attention of Bill O’Reilly [and] prominent conservatives like Phyllis Schlafly. I think a lot of people may look at the issue in a new way.
Why were those earlier assumptions wrong?
A much higher minimum wage would at a stroke solve so many different problems. You’d suddenly have millions of people who aren’t as desperate as they are now. A $12 minimum wage in California would raise the wages of 40% of wage earners an average of $5,000 a year. That’s a life-changing amount of money.
From the conservative side, these people would no longer qualify for many anti-poverty programs. As Mitt Romney said, 47% of Americans don’t pay income taxes. If every minimum-wage couple were earning $50,000 a year, which is what $12 an hour would produce, then they’d be paying income taxes.
We have this huge system of corporate welfare [subsidizing the low-wage employer]. And that’s ridiculous. Taxpayers are providing $250 billion a year [in social welfare programs] to workers who can’t survive on their paychecks. Obviously, businesses would rather have taxpayers pay their workers than pay them themselves. That’s a case of privatizing the benefits of their workers and socializing their costs onto the rest of us. That doesn’t make sense from the liberal perspective or the principled, conservative, free-market perspective either.
One complication: Most of the programs I’m talking about are federal, so the savings would go to the federal taxpayer. Only a small fraction would go to the state taxpayer, so on a state level it would probably be more of a wash.
A few one percenters complain that criticizing them amounts to class warfare. Yet social mobility looks less and less likely.
The median wages of workers in America have been stagnant or declining for almost 40 years. That is unprecedented. One reason America avoided social unrest and conflict is that Americans always did better than their parents economically. That’s no longer the case. Raising the minimum wage wouldn’t solve that problem, but at least people wouldn’t feel they were forced into abject poverty.
All those economic analyses warning of the perils of raising the minimum wage — are they wrong?
In 1996 when [California] raised the minimum wage, people said it would destroy the state economy. Instead, for the next four years, unemployment dropped by a third. Obviously there are broader economic issues, but when you see huge declines in unemployment after a minimum-wage hike, it undercuts the case that it would devastate the economy.
I was surprised at how insignificant price increases would have to be to cover the cost. People said Wal-Mart would have to double their prices. The actual figure is less than 1% — about $12.50 a year [per customer].
The Congressional Budget Office underscored the old arguments with its estimate that increasing minimum wage could cost maybe a half-million people their jobs.
Everybody honest admits that some jobs will be lost. The question is whether it’s a cost worth taking. The [CBO] showed that for every individual who might lose his job, there would be 40 or 50 workers who would get a wage increase. So 98% of the people affected would benefit, and maybe 2% would be hurt. That sounds pretty good to me.
How would it affect illegal immigration?
It would remove the incentive businesses have to hire illegal immigrants. Right now the wages for certain businesses are so low that the only people who will take those jobs have just arrived from other countries, desperate for work. You see a lot of industries that used to have reasonable wages now have wages that are much lower. [That] drives down wages for everybody, including the immigrants themselves. The best way to protect against that is to have a high minimum wage; people can earn a reasonable living.
You’ve advocated this for several years. What finally got people’s attention was turning this into a ballot measure.
These issues are usually trapped in partisan politics and blocked by legions of lobbyists. The initiative process gives voters the opportunity to change the dynamics completely.
You have the money to pay signature gatherers. Does the cost of getting an initiative on the ballot make for an uneven playing field when it comes to being able to change the law?
That’s true, but I just don’t see a better alternative. If you required all signature-gathering to be volunteer, you’d have to dramatically lower the threshold of number of signatures or nothing would ever qualify. As far as I know, there might have been one volunteer initiative that’s been able to get on the ballot in the last 20 or 30 years. That’s just the nature of the process.
But is that fair?
The initiative process certainly has problems, but the example I cite is electricity deregulation. You can make the case that it was one of the greatest political disasters in California history. If it had been [accomplished through] an initiative sponsored by Enron, it would be the example everyone cites as to why the initiative should be eliminated. But since it passed unanimously in the Legislature, maybe it’s more of an argument that we should eliminate the state Legislature.
California has already raised its minimum wage.
It’s a bit misleading. [The 2013 law ] doesn’t raise the minimum wage to $10 until 2016. And when you adjust for the cost of living, California has one of the lowest minimum wages in the country. The [current] $8 is really more like $5.50. When California’s minimum wage does go up, it will probably be [worth less than] the minimum wage in Mississippi and Alabama. That’s ridiculous.
Are you the fox in the conservative henhouse, or will your issue rescue the GOP from the fix it’s in with the 99%?
To the extent it goes into one of those categories, I think it’s the latter.
A California labor federation spokesman told the New York Times he was wary of your motives. On the other side, you may have big business, like the Koch brothers, against you too.
In my initiative campaigns, the unions have generally been my strongest opponents. When I pop up seemingly out of nowhere on this issue, it’s reasonable the unions would be flustered and not know what’s going on. I’ve discussed it with some of them, and I think they’re comfortable with the idea.
Something like the Koch brothers, their focus is on the size of government and taxes. It’s less likely they’ll oppose it so long as the issue is framed in the right way — that a higher minimum wage is not necessarily a job killer, and it would do many things conservatives want: cut social welfare spending, make workers more self-reliant, boost our economy by putting more dollars in the pockets of the working poor who spend every dollar they earn.
It’s not like abortion or gun control; it’s really a practical issue to fulfill the economic and government goals we have.
Labor and business, strange bedfellows no more?
The Economist, very hard-core free market, came out in favor of a much higher minimum wage in the United States. In 2005, the CEO of Wal-Mart [urged] Congress to raise the minimum wage. The point he raised was that Wal-Mart shoppers were getting too poor to shop at Wal-Mart.
When I was reading the book “Nickel and Dimed,” what struck me was that [minimum-wage] jobs themselves really weren’t that terrible. They weren’t pleasant, but once you raise wages to $12 an hour, a Wal-Mart job becomes a much better job.
Edited and excerpted from a taped interview. [email protected] Twitter: @pattmlatimes