Kristen Bell. You were so great as sassy, wisecracking teen detective in Veronica Mars. And I teared up right along with you about sloths on the Ellen Show. But while your Mary Poppins spoof to pump up support for raising the minimum wage was definitely cute and well-produced, it was a little fact-challenged.
Bell’s argument, made in rhyme, boils down to: raise the minimum wage three bucks to bump all workers over the poverty line. Seems simple, doesn’t it? And appealing. Who doesn’t want fewer people living in poverty? Who could object to a “living wage?” But in politics, the simplest answer isn’t always the best one. (Which is a good enough reason on its own to hate politics.)
Raising the minimum wage only works to alleviate poverty if two things are true. First, it must be true that low wages, and not unemployment, is the biggest factor in poverty. Second, it must be true that raising the minimum wage does not, in fact, lead to decreased employment.
Unfortunately for Bell, and us, neither is true. Wouldn’t it be nice if the Democratic narrative on the minimum wage were even closely aligned with reality. All we’d have to do is fight those greedy CEOs who don’t want to have to pay their workers more and pass a law to raise the federal minimum wage $3 and *poof* millions of people are boosted above the poverty line and are finally able to enjoy a living wage.
The reality is quite different. CEOs actually love to raise the minimum wage, and actively lobby for it. Walmart, that liberal boogeyman, supports raising the minimum wage. As does Starbucks. Costco too. Samefor McDonald’s. Muh narrative! Why? "McDonald's will be fine," CEO Don Thompson reportedly told Northwestern. "We'll manage through whatever the additional cost implications are."
Small businesses, on the other hand, won’t. In fact, Wal-Mart and Costco already pay significantly higher hourly wages than the current federal minimum, on average. It’s far more difficult for a small business which hasn’t yet turned a profit to pay its part-time workers high amounts, and executives know this.
But Bell, and Democrats, aren’t just wrong about the narrative. Their facts are also mixed up. Again, raising the minimum wage only decreases poverty if low hourly wages contribute more to poverty than unemployment and underemployment. They don’t.
In the video, Bell tells a cute little story, in rhyme, about a penguin who needs a second job after his full-time one to pay the bills. But the vast majority of people who work multiple jobs do so not because their first one doesn’t pay well enough, but because they don’t have a full-time job.
Looking at who’s living in poverty, only 1 in 10 have full-time, year-round work. Two-thirds of people in poverty don’t work at all, according to the U.S. Census. The problem isn’t that Mr. Penguin isn’t making enough money at his job. It’s that he’s not working enough because there isn’t enough full-time work for all the people who want it. The unemployment rate is 12.2 percent once you include people who are employed part-time but who want full-time work and workers who are discouraged.
How does raising the minimum wage help him, especially when it may make it even harder to find work? Again, a lack of employment, not low wages, is the heart of the matter.
Complicating factors make it impossible to tease out the actual impact of minimum wage hikes on employment. However, simple math would tell you two things. First, if the minimum wage can be increased by law with no adverse impact on employment, why not raise it to $50 per hour? Or $100? I’d much rather be making that than $10. The most likely truth is that employment doesn’t take a nosedive when government hikes the minimum wage because the increases are moderate, employment depends on many factors, and most big businesses are already paying that much.
What we don’t see in the data is how many new, innovative startups have to shut their doors because they can’t affordably employ anyone anymore. The failure rate for startups in the US is astronomical, no doubt in part due to how expensive it is to employ workers. This robs the US economy of new businesses, new jobs, and transformative new technologies.
I love you Kristen Bell. I really do. I love you, and sloths, and satirical send ups of cultural memes. But I love disruptive innovation and the prosperity and great jobs it brings even better. The narrative you’re selling around the minimum wage is simple. It’s cheeky, and it’s fun. But it’s wrong. To end poverty we need jobs. And to get jobs we need fewer rules around employment, fewer tariffs, fewer regulations, fewer corporate taxes, and less cronyism like minimum wage hikes.