Raise the Minimum Wage
by Jay R. Mandle
The growth of MAGA politics has had more than one source. But central to its 2024 electoral victory was the fact that large numbers of the working class voted for Donald Trump. Many did so out of frustration with the decline in well-being that they have experienced in recent years. That economic decline could have been offset. But a tool that would have accomplished that objective – increasing the federal minimum wage – has not been employed by Congress since 2009 when it was set at $7.25 per hour.
Minimum wage legislation is important because it can correct the poverty-level wages that emerge from labor markets. That outcome occurs when employers are able to exercise unfair power in setting wages. Minimum wage legislation provides an offset to that power. No one ever got rich when paid the minimum wage. But with it, an otherwise impoverished labor force is at least able to secure wages higher than those dictated by dominating and profit-seeking employers.
The reality of economic decline experienced by many American workers is easily demonstrated. At the beginning of 2000, the median annual income of wage and salary workers in this country was slightly higher than the government-set poverty threshold for a four-person household. At that time, wage and salaried workers earned $17,368, somewhat more than the $17,050 poverty threshold. By 2024 however, while yearly earnings had increased to $19,292, the poverty line had increased to $31,200. As a result, workers’ average earnings had dropped to 40 percent below the poverty line. In short, though average earnings in the earlier period enabled workers to just barely escape penury, twenty-four years later their median earnings had plunged them to a level well below the poverty line.
Opponents of minimum wage legislation often claim that it causes unemployment. Their reasoning is that with higher wages, employers will reduce their demand for labor. But few studies report that outcome. One recent analysis reveals that the minimum wage legislation implemented in both New York and California actually resulted in increased – not decreased – employment. The authors write that their findings demonstrate the “competitive market model of Econ 101 does not fit the reality of many low-wage labor markets.” The model simply ignores the fact that many employers can exercise enough market power to keep wages well below the market level.
In 2023, the Center for American Progress (CPP) issued a report based on data collected by Sarah Flood and others. They estimated that in 2021, an increase in the hourly minimum wage to $15.00 would have raised the income of a typical wage earner by $792. However, today even a $15.00 an hour wage would not be enough to reach the poverty level. Most analysts agree that the minimum wage should be raised to at least $17.00.
Senator Bernie Sanders recently took the Democratic Party to task for failing to advocate a dramatic increase in the minimum wage. In a statement issued by his office immediately after this November’s election, Sanders declared “it should come as no great surprise that a Democratic Party which has abandoned working class people would find that the working class has abandoned them.” A month later, when interviewed on NBC’s “Meet the Press,” Sanders pressed his point. He angrily noted that Democrats “have not even brought forth legislation to raise the minimum wage to a living wage, despite the fact that some 20 million people in this country are working for less than $15 an hour.” He concluded, “if you’re an average working person out there, do you really think that the Democratic Party…is fighting for you? I think the overwhelming answer is no, and that is what has got to change.”
Despite Sander’s insistence, it remains uncertain whether it was only the Democratic Party’s neglect of working class interests that produced the strong working class support for MAGA that was evidenced in the election. Cultural and other issues clearly played a part. Even if the Democratic Party supports minimum wage legislation more aggressively than it has during the last quarter century, working people may not return to the Party.
But what is likely going forward, notwithstanding Trump’s bombastic rhetoric, is that his Administration will do little to limit the labor market power of businesses to pay low wages. Trump’s fealty to the ultra-rich creates a powerful disincentive for him to address the economic concerns of working people. As a result, many MAGA-supporting workers may rethink their attachment to him. Since the heart of Trump’s power is dependent on an alliance of billionaire loyalists and working class supporters, a splintering of that coalition would provide an opening for a resurgent Democratic Party.
The unanswered question is whether Democrats will take advantage of the political opportunities that a MAGA split would offer. For that to be the case, they will have to prioritize working class interests and immediately start building bridges of communication to economically vulnerable MAGA supporters. Declaring the Party’s support for a substantial increase in the minimum wage will go a long way to beginning construction of those bridges.
ABOUT THE AUTHOR
Jay Mandle is the Emerita W. Bradford Wiley Professor of Economics, Emeritus, at Colgate University. His many books include Change Elections to Change America: Democracy Matters Students In Action, and Creating Political Equality: Elections As a Public Good,. Mandle’s regular monthly editorials, Money On My Mind, appear on the Democracy Matters website, and explore the role of private money in politics and other critical social issues.
The views expressed in Money On My Mind are those of the author, (not necessarily those of Democracy Matters, and are meant to stimulate discussion.