Blocking Minimum Wage Increase, Boehner Relies on Lies

In the January 25 broadcast of CBS television's 60 Minutes program, House Speaker John Boehner dismissed any chance of increasing the current federal minimum wage as: a bad idea. "I've had every kind of rotten job you can imagine," he said. "Growing up, getting myself through school, and I would not have had a chance at half those jobs if the federal government had kept imposing higher minimum wage." Well, let's see about that.

John Boehner was in the vanguard of the post World War II baby-boomers, born November 17, 1949, and his biographical information notes that he got his first job working in his family's bar (at age 8), which means around 1957. At that point in time, the federal minimum wage was set at $1.00 per hour. Maybe this was even more than young John got from his dad and granddad. In any event, by 1961, that figure had been increased by the federal government by 15 percent, to $1.15. Boehner did not mention in his interview that this increase cost him his sweep-up job. In any event, let's be fair to Boehner and look where the minimum wage was when he was just out of high school: In 1968, it was up 60 percent from when Boehner started, all the way to $1.60. That is equivalent to over $10.69 in current dollars, higher than the level Boehner now rejects as imprudent. But more on that later.

By the time Boehner left the Navy due to a bad back and was, to his great credit, working his way through Xavier University as a janitor, the federal minimum wage had been further increased to $2.00 per hour in 1974, $2.10 in 1975, $2.30 in 1976, and $2.65 in 1978, by which time Boehner was settled in a job with the local manufacturing company that would eventually install him as its president.

In short, what Boehner said to CBS was a double lie.

First of all, the federal government, in fact, did increase the minimum wage multiple times while he was working his way up the ladder, and secondly, none of those increases seems to have stopped him from getting the "rotten jobs" that kept him moving up the ladder to eventual success.

The fact that Boehner, like so many politicians, got away with these bald-faced lies is a "tribute" to modern sloppy TV journalism, in this case, as practiced by his underprepared interlocutor, CBS' Scott Pelley. (Mike Wallace, where are you when 60 Minutes really needs you?)

But, the problem of finding the truth in debates about increasing the minimum wage goes well beyond Boehner's misleading sound-bites.

Let's start with the notion that current proposals are calling for an "increase" in the level of the federal minimum. That's true only in nominal terms. The current proposal to increase the standard from $7.75 to $10.10 over two years merely moves the level of purchasing power, as noted above, to the level in effect when John Boehner finished high school. In fact, the purchasing power of the U.S. minimum wage has been steadily decreasing since 1968. To reach parity, it would have to be raised by $3.44 (47 percent), far less than President Obama has proposed, but in line with the range of state and local changes recently enacted or under discussion.

The other prevalent "big lie" about minimum wage jobs is that they are largely held by teenagers. This blogger has personally heard multiple commentators on CNBC, a cable TV financial news source, routinely parrot this outright lie, at least for anyone who has bothered to look up the facts. But, they may have an excuse. Congressman Paul Ryan, widely celebrated for his command of economic and budgetary facts, stated outright that: "The majority of those on the minimum wage are young people just entering the work force." Not so. 88 percent of those earning the minimum wage are over 20. Their average age today is 35 and "she" is most likely to be a full time bread winner for her family.

In citing these facts pulled together by the Employment Policy Institute, the New Yorker magazine also called attention to the most common and persistent argument used against any proposal to increase the national minimum wage level: namely, that it would be a "job killer."

While it may have been one thing to argue against Roosevelt's proposal in the late 1930s as a communist plot, and for Ronald Reagan to link the very idea of minimum wage to the decline and fall of the Roman Empire, the "modern" version now equates fighting off any increase in the minimum wage to the fight against terrorism. A Koch Industries executive told a gathering of high-roller political donors in Dana Point, Calif. last year that the 500,000 he expected to be unemployed due to an increased minimum wage would constitute the main recruiting ground for totalitarianism, for fascism, even for suicide bomber recruitment.

The tens of millions of minimum wage workers who would benefit from a minimum wage increase (estimates range from 15 to over 25 million) would far outnumber such minimum wage "victims." Moreover, again, the facts belie the lies: Research showing that minimum wage increases either have no adverse effect, or have even a minor positive effect on job creation have never been effectively discredited.

In calmer times, it has also been argued that direct tax-system income subsidies to the working poor are a more economically efficient means of addressing the problem of poverty-level wages in a free-market system where businesses should not have to pay more than the "value add" of any worker. Even the godfather of interventionist economic policy, John Maynard Keynes, himself took up this argument for while. (See The Battle of Bretton Woods; John Maynard Keynes, Harry Dexter White, and the Making of a New World Order).

In fairness, this argument is not a lie, but a reputable economic theory, however the wage-depressing effect of the earned-income tax credit, which in the real world can only be counteracted by some level of minimum wage increases alongside.

Moreover, why should the American taxpayer be obliged to subsidize the business plans of McDonald's and Walmart in a free-market system? Or, is the real lie that we continue to believe in the American dream that if you work hard you can get ahead -- just like John Boehner, who clearly benefited from minimum wage increases as he was working his way up, even though he denies it? Washington is sometimes an alternative universe.


Terry Connelly, Dean Emeritus, Ageno School of Business, Golden Gate University

Terry Connelly is an economic expert and dean emeritus of the Ageno School of Business at Golden Gate University in San Francisco. Terry holds a law degree from NYU School of Law and his professional history includes positions with Ernst & Young Australia, the Queensland University of Technology Graduate School of Business, New York law firm Cravath, Swaine & Moore, global chief of staff at Salomon Brothers investment banking firm and global head of investment banking at Cowen & Company. In conjunction with Golden Gate University President Dan Angel, Terry co-authored Riptide: The New Normal In Higher Education.