Reid stops minimum-wage hike bill after Dems balk

So much for changing the narrative in 2014 from the ObamaCare debacle. Democrats, led by Barack Obama, planned to go on offense over the minimum-wage rate to cast the GOP as heartless. But in his rush to the barricades, Harry Reid belatedly discovered that his caucus didn’t like the fight nearly as much as he and Obama did (via Instapundit):


Senate Majority Leader Harry Reid on Tuesday delayed action on legislation raising the minimum wage, the centerpiece of the Democrats’ 2014 agenda.

The Nevada Democrat made the surprising move amid escalating Democratic resistance in the wake of a Congressional Budget Office report released last week estimating that hiking the minimum wage to $10.10 an hour could cost the equivalent of 500,000 jobs by late 2016.


Reid has not yet unified his caucus on the issue, which is a constant in the Democrats’ election-year playbook. Of the 55 senators who caucus with the Democrats, only 32 have signed on as official co-sponsors of Sen. Tom Harkin’s (D-Iowa) bill.

Let’s get this straight. This is Obama’s highest domestic agenda priority item, and the chamber which his party controls can barely get half of their caucus to sign onto it? That’s some genius work at the White House. Who’s their legislative liaison these days?

The issue, of course, is that the CBO actually scored the proposal before Reid could advance the bill. Their estimate of 500,000 jobs lost in just two years would be a boat anchor on any legislation, but especially in an economy where workforce participation looks like this:

The response from the White House didn’t help, either. When challenged on the numbers, their Council of Economic Advisers suggested that business owners should just learn to live with lower profits. As I wrote at the Fiscal Times shortly afterward:


Therefore, Furman advises businesses that they have other options. “The other margins on which firms can adjust — for example, reduced profits — mean that there is substantial literature that has found little or no employment impact on the minimum wage,” Furman told reporters.

This is one of the most revealing statements made by this administration about its economic policy and its worldview. Their vision of an American economy is not one in which wealth gets created in a dynamic environment and creates jobs and opportunities that in turn create more wealth, jobs, and opportunities. This White House sees the economy as a static, zero-sum game in which investors and business owners simply should be told to accept “reduced profits” while government shapes the markets to their own purposes. …

Wages have stalled in the economy, but it’s not from the stasis in the minimum wage, which was last increased in 2009. It comes from economic, regulatory, and tax policies that tell investors that they should expect less return on their capital and penalize them for expansion. If minimum-wage increases solved the wage-stagnation problem, the 2007-9 increases should have worked. Instead, it constricted the labor markets for the people with the most need and contributed to entry-level job lockout.

In order to drive real wages and buying power up, we need policies that incentivize both investors and workers, rather than celebrating disincentives. We need to stop penalizing investment and increasing the costs of labor, rather than attempt to tell people how wonderful higher labor costs and expanded regulatory burdens will be for their businesses. We will end stagnation when we stop embracing it as the ideal.


Not surprisingly, Senate Democrats aren’t all that keen on political seppuku. The Hill notes that some red-state Democrats facing voters are conspicuously absent from the bill’s supporters, like Kay Hagan (NC), Mary Landrieu (LA), and Mark Pryor (AR). Pryor wants his state to raise its minimum wage to $8.50 rather than do anything at the federal level. Even Tom Carper (DE), who has a safe seat and won’t be up for election this year, wants a revised proposal with a lower increase. Tom Harkin, the retiring Iowa Democrat, refused to produce a smaller bill.

Instead, Reid and Obama now have egg on their faces, and a narrative in ruins. If half of their own caucus balked at the minimum-wage hike, it’s hard to point the finger at Republicans.

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