What would Wisconsin Dems do? Part 1 of 5: the minimum wage

Bolstering the minimum wage an easy way to fix Wisconsin's economic worries

If Democrats were to take back political control of Wisconsin, what would they do?

The question is perplexing to many across the Badger state. The Democratic Party too often comes across as simply “anti-Scott Walker,” as nothing more than an oppositional party to a governor who has a clear vision of what he wants to do.

While it’s true that the party is trying its hardest to diffuse the disaster that is the “Gov. Walker era” by opposing his most egregious of policies, it’s inaccurate to say that the Democrats don’t have a platform of their own to stand on.

In order to dispel the errant belief that the Dems have nothing to offer, I offer for your reading pleasure five important ideas the Wisconsin Democrats are proposing, based off of the resolutions they passed at their last convention this summer. These ideas are beneficial for the average Wisconsinite, creating a more hospitable state for our citizens to live in, and creating a better state for everyone to take pride in over the long run.

Part one of this five-part blog post looks at an important topic that’s taking hold of the nation’s attention as well as our state’s...that of the minimum wage, and the benefits that come from putting more cash in the hands of a much-needed consumer base.

Increasing the minimum wage
Shortly after his re-election, President Barack Obama came out strongly for raising the minimum wage to $9 per hour. Such a move would “restore the inflation-adjusted value of the minimum wage back to where it was in 1981.”

Raising the wage that the poorest of workers earn to $9 per hour would increase monthly paychecks by about $260 -- enough to send a family of four out for another trip to the grocery store each month (plus maybe a chance to fill-up their car’s gas tank).

Conservatives frequently oppose the minimum wage, citing the costs that will come with doing so as too burdensome for the average “job creator” to handle. Either job creation will suffer, or products will cost more, contend Republicans.

Yet those assessments don’t match up with reality. Study after study details how job growth isn’t negatively affected by increasing the minimum wage, but looking at a specific example overseas might help shed some light on the matter as well.

One might take a look across hemispheres to the island continent-country of Australia to see what effects a higher wage might bring. There, where the minimum wage is $16 per hour (about $14.50 in American dollars), the unemployment rate stands around five-to-six percent -- numbers that are enviable across the globe, including in our neck of the woods.

Which begs the question: if the minimum wage hurts job growth, how can it be that a nation with nearly double our wage rate has substantially lower unemployment?

Economics 101
How can a higher minimum wage bring about economic improvement? To answer that, a brief lesson in economics is necessary.

Jobs are created when companies are able to pay salaries, but also when those jobs are needed due to demand for a product or service.

Conservatives argue for tax cuts to provide capital for companies so that “job creators” can pay for jobs. But that’s only half of the equation -- indeed, why would companies spend money to hire more if there’s no incentive to do so? Demand is much more important than capital alone because demand creates a reason for hiring (to create more of a product or provide more of a service).

What’s more, if demand rises, capital is flowing into the coffers of the company anyway. Tax cuts for companies create revenues, but they don’t create jobs. Demand for products create both jobs and revenues, which is why it’s a win-win situation for employers and potential workers.

Now, how does one grow demand? Again, it isn’t with tax cuts to the rich or to corporations directly. A strong consumer base is needed in order for demand to grow. When consumers -- the majority of which are working class families -- make purchases, they create a higher demand for the products they buy. With profits growing and evidence of a product gaining popularity, employers become willing to pay for more workers.

The minimum wage and Wisconsin
That would be the case in Wisconsin, too, if the minimum wage went up. Consumers in our state would be able to purchase more goods and services from Wisconsin retailers, who would see a rise in demand and profit, and grow jobs as a result.

It’s clear that the naysayers will disregard the tenets of capitalism and make outrageous claims about the dangers of raising the minimum wage. But raising the wages of workers won’t skyrocket the costs of goods. Even Henry Ford recognized the importance of paying his own workers a decent wage, so that they could afford to buy his own product.

Wisconsin desperately needs job growth. The poorest workers in our state also need help generating a livable income. The minimum wage would help both of those situations, growing incomes for lower-wage workers while building a stronger consumer base for Wisconsin businesses, creating jobs in the process.

The Democratic Party of Wisconsin gets this. And should they take control of the statehouse again, they undoubtedly would work to strengthen the consumer base, through raising the minimum wage and through other initiatives as well.