Middle-Income Wage, Not The Minimum, Needs To Be Raised


Posted 05/07/2014 06:46 PM ET

There was more bad news for workers' paychecks in last week's April jobs report: Wages and salaries were flat. No raise at all not even to keep pace with inflation. Yet President Obama continues to obsess over raising the minimum wage as if he holds a magic wand to make American workers better off.
He says it is time working people "got a raise," and he's right. But we'd argue that a higher minimum wage to $10.10 is a clever diversion from the real crisis: falling middle-class incomes.
For the vast majority of workers, the problem isn't a flat minimum wage, it's a declining middle-class paycheck. The minimum wage affects only, at most, 5% of workers and almost half of them are in starter jobs or are teenagers. What about the other 95% especially those working parents with children?
These are the people who desperately need a raise. According to statistics from Sentier Research, based on monthly Census Bureau data, the median household income is still some $4,000 lower today than it was before the recession began in 2008, and about $2,000 lower than it was since the recovery began in June of 2009.
Usually periods of recovery from a financial meltdown are years when workers rapidly make up the lost ground in income and job opportunities surrendered during recession. In this case, average workers have continued to lose ground. This explains why more than half of workers think the recession never ended. For them, it hasn't.
This bitter pocketbook reality speaks loudly to the utter failure of Obama's economic policies bailouts, stimulus plans, $5 trillion more in debt-financed spending, ObamaCare, green-energy failed investments and tax hikes. This president has thrown everything he has from the liberal playbook at this stagnant economy and, alas, none of it has worked.
To be fair, the wage meltdown really began at the end of the Clinton years, when the technology and dot-com bubble burst. A major reason for the disturbing lack of progress in middle-class earnings in the 2000s was a weak dollar that shrank in real purchasing power. The price of gold has quadrupled from 2000 to 2014, from $300 to $1,300 an ounce.
Even if a raise in the minimum wage didn't destroy jobs which it would, with even the Congressional Budget Office predicting about a half-million lost this policy will do nothing for the middle class. It might actually hurt workers by making the price of a McDonald's Big Mac or a hotel stay a little more expensive.

Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook