Policy: Economy

Seven Nobel Prize-winning economists endorse increase in minimum wage

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Dozens of top economists, including seven winners of the Nobel Prize for economics, have signed a letter approving of Democrats' bid to raise the minimum wage.

Addressed to congressional leaders, the open letter organized by the left-leaning Economic Policy Institute recommends legislation introduced by Sen. Tom Harkin, D-Iowa, and Rep. George Miller, D-Calif., that would increase the federal minimum wage from its current $7.25 hourly rate to $10.10, indexed to increase with inflation.

The letter says the legislation would directly benefit 17 million workers by 2016, and that "another 11 million workers whose wages are just above the new minimum would likely see a wage increase through 'spillover' effects, as employers adjust their internal wage ladders."

The economists also dismiss concerns, voiced by congressional Republicans who oppose the bill, that raising the minimum wage will reduce employment in low-wage occupations. They write that the "weight of evidence" shows that minimum wage hikes have "little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market."

Speaking at an event at the Economic Policy Institute in Washington to introduce the letter, White House economic adviser Jason Furman called raising the minimum wage "one of the most important tools we have" for addressing poverty and inequality in the U.S. "We fundamentally think that you want to set a minimum wage so that if you’re working full-time, year-round, you're going to be able to raise your family above the poverty line," Furman said. Taking into account tax credits, Furman said, the $10.10 line would lift 1.6 million people out of poverty.

Harkin and Miller, both of whom have announced their intention to retire after serving out their terms, criticized opponents of the bill, characterizing them as uncaring.

"We used to agree that if you worked hard and played by the rules you could have a good economic stake in our society,” Harkin said. "In recent years it’s been alarming to see how these fundamental principles and values are being degraded in our public policies. For many, the attitude is: ‘tough luck, you’re on your own.’

"I’ve been saying lately there’s a harshness that’s crept into our political debates. … It’s hard on people, and especially hard on people who don’t have anything, hard on people who are at the bottom rung of the ladder," he added.

Miller also placed blame on businesses as well as Republicans for failing to raise the minimum wage, saying that "you have those in the corporate world … that just decided they’re going to take more" but not "help out the people that allowed them to be rich through their hard work.”

"This is not a hostile act against the economy," Miller said. "This is a reinforcement of the American idea that if you work hard you get a minimum wage."

Harkin suggested that the bill might get a vote after the Senate takes action this week to move an omnibus bill to fund the government and to reauthorize an emergency extended unemployment benefits program. He acknowledged, however, that the legislation faced a tough path in the Senate and particularly in the Republican-led House.

One sticking point, Harkin said, would be GOP attempts to lower the rate from $10.10. The $9 hourly wage that the Iowa senator said some Republicans have told him they would support — and which the White House initially advocated before approving of the Harkin-Miller bill late in December — would "lock in subpoverty wages" for workers, a result he said would be unacceptable.

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