More Evidence Bush is a Closet Liberal

President Bush says that raising the minimum wage is “common ground” that he’d be willing to meet the Democrats on. It is stuff like this that makes me wonder if Bush really is a Conservative/Republican.

As I’ve argued before, raising the minimum wage does little to address the issue of families living in poverty. A better policy for addressing this issue is raising the EITC. Why this can’t be common ground that the President meets the Democrats on, I don’t know. Much better to reach and do something that just won’t help much save give teenagers more money for movies and gas while living at home with Mom and Dad.

FILED UNDER: 2006 Election, Economics and Business, US Politics, , , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.


  1. madmatt says:

    Gosh it must be nice not to know anybody who is struggling with 2 minimum wage jobs just to pay bills….the eitc does nothing when you are that far below the poverty line.

  2. I guess I look at a bit broader picture. This is one of the things the dems ran on. It is likely to help many union house holds (where jobs are often tied to a multiple of the minimum wage) so the EITC would be economically more rational (madmatt apparently doesn’t understand what the EITC does), but politically has very little if any appeal to the democrats (who do own the pipe for the piper to play now).

    On the grand scheme of things, the minimum wage isn’t likely to do much real good, but it is also not likely to push us into a depression. You are likely to see a ripple effect for years as fewer youths get the first job as early, delaying their rise through the economic ladder. As with a lot of democratic bills, minorities will be most likely hurt the worse even though in theory they would be helped the most.

    Compared to running a way from Iraq, it isn’t even in the same galaxy as far as harming the nation.

    I don’t see this as a bad “olive branch” towards a “lets make things work” effort. I think one of the best ways for the republicans to reverse the congress is to let the democrats have their head. Let them say what is on their mind and put choices up for votes. Republicans may vote against their ideas, but lets get some of these freshmen on record with some votes. There is a lot of passion on the left to “do something”. Republican obstructionism is likely to keep that passion stoked. Letting the democrats bring their laws to the front (or not as their leadership counts noses) is likely to leave the left as disappointed in the democratic majority as the right was with their republican majority.

  3. Steve Verdon says:

    Gosh it must be nice not to know anybody who is struggling with 2 minimum wage jobs just to pay bills….the eitc does nothing when you are that far below the poverty line.

    Really? Try having kids. Note, the EITC is best for families living in poverty. And when you have a family and are that far below the poverty line it does help.

    Here is a paper madmatt that you might find interesting.

  4. spencer says:

    maddmatt — if you are going to read the
    Neumann paper you should also go here

    to see what they have to say about it.

    Other noted economist reach different conclusions.

    Other research has lead prominent economists to publicly support modest federal and state minimum wage increases. According to a statement signed by over 650 economists, including five Nobel Prize winners in economics and six past presidents of the American Economics Association, modest increases in state and federal minimum wages can “significantly improve the lives of low-income workers and their families, without the adverse effects that critics have claimed” (Economic Policy Institute 2006).4

  5. Steve Verdon says:

    From spencer’s source.

    Following the release of Card and Krueger’s study, the Employment Policies Institute (EmPI), a restaurant-supported lobbying and research organization, immediately began public criticism of the findings (Neumark and Wascher 2000, 1,395). They recommended that payroll records collected directly from restaurants would be more accurate than the results from phone surveys. EmPI then solicited responses directly from restaurants without the use of a standardized procedure.2

    In reading footnote 2 one learns that the apparent problem is that the data were collected by telephone. What Liana Fox, the author of that lengthy article doesn’t tell the reader, is that is precisely how Card and Krueger collected their data. Further, Card and Krueger’s phone interviews were about an employers intentions in terms of hiring, firing, etc. when it came to changes in the minimum wage. Neumark and Wascher’s data, presumably, were actual employment records.

    Oh and spencer, I’ve seen a list of scientists who have objections with evolutionary theory, I suppose you are a fervent supporter of intelligent design as well then? I find such petitions rather lame forms of argument.

  6. Steven Plunk says:

    Steve V.’s point concerning competing lists of supporters versus critics is important.

    Evidence and logic are much more relevant when analyzing policy changes such as the minimum wage.

    There are enough leftist/hippie college profs who claim to be economists out there to make a list to support just about anything. With increases in the minimum wage being a perceived form of income redistribution why wouldn’t these socialist leaning lefties sign a petition?

  7. >It is stuff like this that makes me wonder if
    >Bush really is a Conservative/Republican.

    You’re only just NOW beginning to wonder?

  8. Half Sigma says:

    Today there is yet another post at my blog explaining why a small increase in the minimum wage won’t harm the economy and may actually make it more efficient.

  9. spencer says:

    Actually, I am not a big fan of the minimum wage and agree that the Earned Income Credit is a superior policy tool.

    But this does not negate my position that the minimum wages harms poor people is still a theory in search of any evidence to support it.
    It is just a good example of my belief that the worse thing the economics profession does is turn out a bunch of students that do not appreciate that the static, pure competition model taught in intro economics is at best a first approximation of reality.

    the mini mun wage scare story is advanced by people who have the mistaken view that cheap labor is the best way to advance our standard of living.

    They completely fail to recognize that the best thing that could happen is that raising the minimum wage could force poorly managed business to increase their capital/labor ratio and thus improve the well being of everyone — including those who lose their jobs in the first round.