Bernie Sanders wants to raise the Federal minimum wage to $15 an hour by 2024

The pros and cons of raising the minimum wage

Bernie Sanders demands a minimum wage of $15 an hour

The Raise the Wage Act of 2019 was passed by the House on July 18, 2019.  It would phase in raises to the minimum wage to $15 an hour by 2024.  The bill would index future minimum wage increases to median wage growth.  Currently, the minimum wage is $7.25 an hour; it has not been increased since May, 2007.  Senator Mitch McConnell is not likely to take up the bill in the Senate.  (Ironically, Senator Sanders was chided for not paying his campaign workers an effective minimum wage of $15 an hour - largely because his staff were working, on average, 60 hours a week.  This issue has been rectified.)

The biggest question people have about raising the minimum wage is whether or not it would decrease hiring.  Another question is what would the impact be on different parts of the country that have different pay scales.  Where pay scales are lower, workers would benefit enormously; the businesses that hire the workers, though, would experience a pretty drastic increase in wage costs.

Liberal economists, such as those who work for the Economic Policy Institute (EPI), believe that raising the minimum wage would be good for the economy.

In testimony before the US House of Representatives on February 7, 2019, Ben Zipperer, economist for the EPI, stated that a single parent earning the current wage does not earn enough in full time work to rise above the poverty line.  He also state that if the minimum wage had "kept pace with labor productivity growth since 1968, this year it would be more than $20 an hour."

The EPI cites studies that show that raising the minimum wage would not adversely affect employment.  In one study mentioned, they found:  "In their meta-analysis of 739 estimated effects from 37 published studies on the minimum wage and employment between 2000 and 2015, Wolfson and Benjamin (2016) find 'no support for the proposition that the minimum wage has had an important effect on U.S. employment.'"  (From a 2/5/19 report by David Cooper for the Economic Policy Institute titled "Raising the federal minimum wage to $15 by 2024 would lift pay for nearly 40 million workers.")

On the other side, some economists have argued that increasing the minimum wage, especially in areas where the difference between the current and proposed minimum wage is significant, would adversely affects employment.  In a 9/28/18 article by Adam Millsap in Forbes Magazine, he quotes from a study published in the American Economic Review that maintains that increases in the minimum wage reduce employment in the long run.

The studies' authors, Paul Beaudry, David Green and Ben Sand, found that over a ten year period  "that a 1% increase in wages leads to a 0.3% to 1% decrease in employment rate depending on whether wages increase citywide or only in one industry."  The authors found that most of the loss in jobs is  due to firms closing, rather than layoffs.

The minimum wage debate is complex.  The plan Sanders proposes eases the impact on business by phasing in the increases over several years.  What does not seem to be in doubt is that it is difficult to live on a full time minimum wage job.

On an interesting historical note, Otto von Bismarck created the first social security system in the world - to keep the masses from adopting socialism.  You have to ask yourself, if people cannot afford to live on the minimum wage, what will happen to economic growth, and our internal national security, if working class people having little or no disposable income.

Is Free Universal Pre-Kindergarten a Prescription for Success?

Some Democrats running for President think so

Democratic politicians want to help ease the burden of childcare

Free universal pre-kindergarten for all three and four year olds is being touted aggressively by two men running for president.  Both Bill deBlasio and Julian Castro propose it.  As mayors of New York City and San Antonio, TX, respectively, they have experience with such programs.  Both men initiated them for four year olds - and both have been considered successful.  Other candidates have expressed interest in universal pre-K, but not as forcefully as Castro and deBlasio.  Elizabeth Warren, Kirsten Gillibrand, John Delaney, and Jay Inslee all want it in some form.

A successful pre-K plan has to both help children get ready for kindergarten and help families save money.  Additionally, it should raise the pay of pre-K teachers.

Publicly funded pre-K would ease the financial burden on families with small children.  For example, The Care Index found that the average cost of care for a four year old in Illinois is $10,414 - about 19% of the median household income, and about 61% of income for a single parent earning a minimum wage.  (The U.S. Department of Health and Human Services defines affordable child care as being no more than 10% of a family's income.)  (From a New America article titled "Policy Recommendations:  Universal Pre-K" by Abbie Liederman.)

Some would argue that poor families can avail themselves of the Head Start Program, which is available to families living at or below the poverty line, the homeless, any foster child, or families receiving public assistance.  Head Start, though, does not address the pre-K needs of families living much above the poverty line.

Others look to the Head Start Program to argue agains universal pre-K, stating that the benefits gained during the program fade soon after the children enter kindergarten.  In a study  released on 12/20/17 titled "Head Start Programs have Significant Benefits for Children at the Bottom of the Skill Distribution" by Marianne P. Bitler, UC Davis; Hilary Hoynes, UC Berkeley; and Thurston Domina, UNC, sponsored by The Center for Poverty Research at the University of California, Davis, found that while academic results often fade for most children - those who were in the bottom of the "achievement spectrum" seem to  benefit long-term.   There is also a question of whether the disappearing benefit is the fault of Head Start, or of a failing public school education.   And people are just starting to study the apparent positive impact that emerges when former Head Start students become teenagers.

It will be interesting to see if this issue gains traction as the campaign season progresses.  Families with small children will be happy if it does.