The Minimum Wage: Lifting Families out of Poverty since 1919!

If we raise the minimum wage, people will no longer live in poverty.

Until the feds change the definition of “living in poverty,” at least.

The Democrat-controlled Wisconsin State Senate is all set to raise the minimum wage again – it’s been a little over a year since the last increase – with Senate Bill 130. That will make the wage $7.25 an hour.

No biggie: the federal minimum wage will be $7.25 in another year and a half, anyway. Right?

Yes, but that’s not all the bill does. It also indexes Wisconsin’s minimum wage to inflation. It’ll go up every year – up, past those in surrounding states. Past those in competing states, which is…hang on, lemme count…yeah. All of them.

But never mind. Full steam ahead. Senate Majority Leader Russ Decker, also the bill’s lead author, says:

“Indexing the minimum wage to inflation will help lift families out of poverty. It will help keep people out of the welfare system and make sure the first rung on the ladder of success will be strong enough for them to move up,” said Decker.

Decker is right about one thing: higher-paying jobs are better than lower-paying jobs. Of course, any jobs are better than no jobs. We should be able to agree on that.

On the same point, more jobs are better than fewer jobs. Even Democrats understand this: that’s why Lieutenant Governor Barbara Lawton was out recently, touting the state’s tax cut for film production. That’s why Governor Jim Doyle is out promoting his “Accelerate Wisconsin” agenda: a collection of tax cuts, credits, and other programs designed to improve Wisconsin’s business climate.

Make it cheaper to do business here, and more businesses will do business here!

So many Democrats don’t understand that. Some – like those in charge of the State Senate right now – don’t get the relationship between making money and creating jobs. Their agenda is all about squeezing business.

Profit is important. Profit. Income minus expenses.

And taxes are part of expenses. But guess what: payroll is an even bigger part of expenses. If the Doyle/Lawton doctrine – reducing the tax burden to help business – is good, then government-forced increases in payroll are bad.

It wouldn’t really matter, if our minimum wage was the same as everybody else’s. It won’t be: the bill raises our minimum wage as of September 1, and then starts indexing one year later. So ours will be among the highest in the nation.

But. If it “helps lift families out of poverty,” won’t it be worth it?

Well, if indexing for inflation means lifting families out of poverty, then I’ve got good news.

A little history now, and then a little math.

Wisconsin’s first minimum wage, 22 cents an hour, went into effect in 1919. Twenty-two cents, adjusted for inflation, comes to $2.67 an hour in 2007 dollars, less than half of today’s actual minimum wage.

In 1956, the minimum wage went up to 70 cents. Adjusted to 2007 money, that equals $5.41 an hour. Today’s wage is still ahead of inflation!

In 1989, the minimum wage went up to $3.65. In 2007 dollars, that equals $6.19.

In all three cases, actual growth in the minimum wage outstripped inflation. It was last raised – to $6.50 – in 2006. If it rises to Sen. Decker’s $7.25, that will be an 11.5% increase over two years’ time.

So. If indexing for inflation will “lift people out of poverty,” as Senator Decker says, well, we’ve already done that. In fact, the minimum wage has done far better than inflation over the years.

Does that mean we’ve lifted people out of poverty? The good Senator would, I bet, laugh me right out of the hearing room if I said it had.

To be honest, I’m not entirely opposed to indexing the minimum wage: I’ve thought, in the past, that doing so would at least get the issue off the table. Keep the Democrats from playing saint.

Of course, it wouldn’t. Even though the minimum wage has done everything Senator Decker wants – and more – since its inception, he continues to demagogue the issue. If indexing succeeds, other Democrats will do the same.