Ohio Congressional Races: It’s the Labor Market Stupid
The leader of the Republicans in the House is John A. Boehner who is from Ohio. Via Mark Thoma (“The Democrats are accused of a cynical ploy by Republicans? That’s funny”) comes Rick Klein with some goods news on the minimum wage increase proposal:
With Democrats plotting to make the minimum wage a major issue in this fall’s congressional races, House Republican leaders are conceding that they may have to yield to pressure for an increase to the federal standard, which has been frozen for nearly a decade. Faced with elections that could cost them control of Congress, John A. Boehner, the House majority leader, acknowledged Thursday that Republican leaders are likely to reverse course and hold a vote on a proposed minimum wage increase. Though Boehner said it was a “cynical ploy” for Democrats to make it a campaign centerpiece, polls indicate that voters clearly favor an increase in the wage, and Boehner acknowledged that GOP leaders are “probably going to have to find some way to deal with it.” A week earlier, Boehner, an Ohio Republican, all but ruled out allowing a vote on the matter, saying an increase is “very bad economic policy.”
I wonder if the average blue collar worker in Ohio agrees with Mr. Boehner:
In the House, Democrats are trying to attach a minimum-wage increase to any bill they can to force the GOP’s hand on an issue that splits their party. Representative Nancy Pelosi – the minority leader and a California Democrat poised to become House speaker if her party wins this fall – has pledged to boost the minimum wage on the first day of a Democratic-controlled Congress. “This issue is a clear winner for Democrats if the Republicans continue to oppose it,” said the House minority whip, Steny H. Hoyer, a Maryland Democrat. “We want to have a change in America. We want to have a focus on working men and women.” Already, Democratic candidates in a range of House races have hammered their Republican opponents over the stalled minimum wage proposal. The issue has been emphasized in economically struggling parts of the country, including working-class districts in Ohio, Pennsylvania, upstate New York, and parts of New England.
Of course, we get the usual argument that unless the real value of the minimum wage is eroded by inflation, we cannot reduce the unemployment rate:
The federal minimum wage has languished at $5.15 an hour since 1997, and inflation has eroded its value to its lowest level in 50 years, according to independent economic studies. Democrats, led by Senator Edward M. Kennedy of Massachusetts, want to raise the wage to $7.25 an hour, but Republicans who say the increase is a job-killer have used a variety of procedural means to block a straight vote on any such proposal.
Given that Boehner is from Ohio, I checked the BLS data on Ohio’s unemployment rate. During the four years after the last time we increased the nominal minimum wage, Ohio’s unemployment rate fell from 5% to 4%. After President Bush took office, Ohio’s unemployment rate rose with the recession and has slowly recovered. With the very low real minimum wage rate, the May 2006 unemployment rate for Ohio was 5.3%. Contrast this to the fact that the national unemployment rate was only 3.4% in late 1968 when we had the highest real value for the minimum wage in our history.
I realize that economists have extensively debated the effect of changes in the real value of the minimum wage on employment – with little consensus. But if the GOP leadership wants to tell the average voter that they oppose a restoration of the real value of the minimum wage – I invite them to do so – especially in Ohio.