Welcome Back to Democratland

Posted: Jan 19, 2007 12:01 AM
Welcome Back to Democratland

Some of you are probably rusty. Others are too young to recall what life was like in Democratland before 1995. Now, with House Speaker Nancy Pelosi's majority well into its vaunted "100 hours," you are getting a refresher course. Call it the American Idyll.

It is a world in which facts always bow to feelings. What matters is not so much that you do good, but that you feel virtuous, or perhaps more to the point, are seen to be virtuous.

Consider the increase in the minimum wage Congress passed by a vote of 315-116 (more than 80 Republicans joined all of the Democrats in voting aye). The speeches were heartwarming. "With the passage of this crucial legislation, we will reward work, paying America's workers a decent wage so they may join in our nation's prosperity," declared Speaker Pelosi. Majority Leader Steny Hoyer chimed in that "You should not be relegated to poverty if you work hard and play by the rules." Rep. Bill Pascrell proclaimed that "The little guy is not going to be forgotten any longer."

Sounds great. The Democrats are back in power, and now the deserving working poor are finally going to be paid a living wage.

Except that it isn't true.

Fewer than one in five minimum wage workers lives in a family with income below the poverty line. Despite the picture painted by the Democrats in Washington, more than 82 percent of minimum wage workers have no dependents, according to the Bureau of Labor Statistics (BLS). Minimum wage workers tend to be young (under 25) and single (often they are students working part time), and a full 40 percent come from homes with an annual income of $60,000 and higher. Never-married workers are more likely than married workers to be paid minimum wage.

One of the Democrats who extolled an increase in the minimum wage reminded listeners that these workers "had not gotten a raise in 12 years." Well, that's misleading. It makes it seem that hundreds of thousands of workers have been toiling away at $5.15 an hour for more than a decade. Not so. Again, the BLS reports that 63 percent of minimum wage workers receive a raise after the first year of employment. Only 15 percent are still receiving the lowest wage after three years on the job.

The BLS also found that part-time workers are far more likely to be paid minimum wage than full-time employees. Only 1.2 percent of full-time, year-round employees earned $5.15 an hour or less in 2005.

The Democrats' claim to be fighting poverty by raising the minimum wage is way off target. Among the poor, the problem is not so much one of low wages as of non-work -- call it the American Idle. The Census Bureau finds that 63.2 percent of individuals aged 16 or above living in poverty did not work at all in the year preceding the survey. Raising the minimum wage obviously does nothing for those who aren't working.

As for those who are, their prospects for employment may be narrowed by a rise in the minimum wage. Employers forced to choose between raising a marginal employee's salary and firing him or her may well choose the latter. Or the employer may reduce the number of entry-level positions available. This doesn't particularly hurt the college kid who is looking for extra pocket money, but it does hurt the unskilled worker looking to climb onto the lowest rung of the economic ladder.

So what should a well-intentioned politician do if he wants to improve the lot of the poor in America? Well, here's one thought: Encourage charities to give used cars to the poor. According to a survey noted by the National Center for Policy Analysis, having a car and some work experience increased the chances that a poor person would be self-sufficient by 94 percent. There are other intriguing ideas there as well -- far more exciting and potentially successful than the hoary old minimum wage hike.