Hootsbuddy on The Minimum Wage as an Economic Stimulus

In Hootsbuddy's opinion increases in the minimum wage have a stimulating effect on the economy because every dime going into that segment of the labor market will be spent immediately. Those working at the minimum wage and others receiving a little bump in earnings thanks to the tandem effect, are not the ones who set aside part of their earnings for a rainy day. For that population the rainy day is already here.

Another increase in the minimum wage has already been scheduled for July, 2009. In the overall scale of the mess we are in, the impact will barely move the needle. Most economists and other observers likely won't notice. But for those who get the increase it will literally be Christmas in July. TV reporters won't be chasing after busboys and housekeepers to get stories for the evening news. Who cares if they can now buy enough baby food to last them two weeks instead of one, or put another second-hand tire on that piece of junk waiting for the owner to get it running again. Those are lifestyle tales that don't attract the "middle" class even though they wouldn't be middle class without a lower class.

I can hear it now, screams of "class warfare" rising from the gasbag and talk show set. But guess what? I really don't care.

As I write this Hillary Clinton is in Asia and the topic of the day on Washington Journal is whether or not she should be pushing the Chinese about human rights. After all, this is the twentieth anniversary of the Tienanmen Square uprising. Callers to that program are a mixed bag, but in the first few minutes I heard mention of Chinese "slave labor," poor quality, dangerous production, and an oppressive system using savage methods to silence free speech. These complaints are coming from Americans who as a group eager to do business with Walmart and other retailers in a relentless pursuit of the lowest price, even (or especially) if that means buying products from China. They forget that the video games, cell phones and computers we love so well also come from there.

Discussions of the federal minimum wage are as full of contradictions and mixed messages as discussions of human rights abroad. As consumers we hate the notion that when wages increase goods and services cost more. Members of the middle class are often too close to the bottom to have sympathy for those still there. (Let their incomes get stuck for a couple of years and see how they react.) This week we witnessed outraged complaints from homeowners who were not in trouble because the stimulus bill had no candy in the stocking for them. Rick Santelli's disgusting rant on CNBC was a public exhibition of selfishness that appealed to the lowest common denominator of American self-absorption. When he said "The government is promoting bad behavior" my first reaction was "Excuse me? Did I just hear a reporter standing in the midst of a bunch of Wall Street types complain about bad behavior?" If I were in that place "bad behavior" would be the last topic I would mention. He later got of a cute line about giving money to people who "carry the water instead of those who drink it," never imagining a population near the bottom who worry about paying for their water, having to decide between utilities or groceries. (Before I leave the Santelli reference, here is a link to Robert Gibbs' serious, adult response during a White House press briefing.)

I could go on like this for pages, but the inspiration for this post comes from a referral among my stats.

I have no idea when it was started but someone put up a website called The Minimum Wage and Economic Stimulus. It makes me especially proud that something I wrote last year (when the federal minimum wage was increased for the first time in many years), appears as the first link on their home page.

Readers are invited to check it out. At this point, as I said, I can't figure out who put this together or how to leave comments. Until then, I send them thanks for noticing.