Sunday, April 20, 2014

How The Clinton White House Played Politics With The Minimum Wage

The minimum wage is a very bad idea and don't think I am in favor of it in any form, indexed or otherwise. Still, I found this Dave Jamieson reporting, on the type of plotting that goes on at the White House, instructive:
 Democrats in Congress and a clear majority of Americans would like to raise the minimum wage and tie it to an inflation index so that it keeps up with the cost of living. This concept -- known as indexing -- is something of a holy grail for backers of a strong minimum wage, since it would eliminate the need to constantly re-legislate new increases to the wage floor.

The idea isn't new. In the late 1990's, Sen. Ted Kennedy (D-Mass.) had championed legislation that would have indexed the minimum wage and kept it from eroding over time. His efforts failed.

And according to newly released documents, they appear to have failed at least in part because the economic team under President Bill Clinton didn't want Democrats to lose hold of a winning political issue.

In a January 1998 memo to Clinton, Gene Sperling, then the director of the National Economic Council, laid out all of the reasons why his team couldn't get behind Kennedy's indexing proposal. Part of it, he said, was due to a potential show of hypocrisy, since they'd opposed an indexing proposal related to capital gains in budget negotiations. Another concern was that some Democrats could oppose it on the grounds it would "lock in" a permanently low minimum wage (a concern that still exists today). And they were worried about the logistics of the Labor Department figuring out a new increase each year.

But then there was this: "[S]ince the minimum wage would automatically rise each year, it would take away a good political issue for those who believe the minimum wage is an important tool to help low-income families."

Here's another way to read that: Keeping the minimum wage somewhat low is helpful politically to Democrats who say it should be higher.

Instead, Sperling, who would become head of President Barack Obama's economic council, said the economic team recommended Clinton support a moderate increase in the minimum wage, from $5.85 to $6.15 by 2002.


  1. Peg the minimum wage to shadowstats.

    1. Ah, the progressive mind at work... one intervention begets another.

  2. I'm sure there are some well-intentioned do-gooders pushing for stuff like this, but I am convinced that those setting policy know they are stupid economically, but they are politically very opportunistic.

    Minimum wages hurt the low skilled. The ADA harms the disabled. Equal pay for equal work harms women. Anti-discrimination and affirmative action harm minorities.

    None of this bothers the elite, as they can use the people's economic ignorance to scam them time after time. This won't stop until the dollar collapses.

  3. I highly doubt that these people would want to peg the minimum wage increases to the CPI. Over time as the cost of living continued to rise faster than wages, it would shine a spotlight on, and become clear to more and more people that the government's "version" of annual inflation is a complete joke.