Economic issues

Right- wing populism vs the minimum wage

While traditionally Right- wing arguments against the minimum wage are renowned, modern times have showed that for conservative parties to gain success amidst an increasingly Islamized, diversified West, they must court the support of native, blue collar populations. So how could this pivot be made in regards to the minimum wage, without entirely disregarding long held principles?

Some years ago, anti- feminist icon Phyllis Schlafly along with the author of, offered intelligible perspectives on how increasing the minimum wage can in fact serve conservative causes. Likewise, Pat Buchanan’s suggestion that tax cuts should accompany any raises to the minimum wage, appears sensible in ensuring business viability.


“Minimum Wage and Welfare: the Tradeoff”, Eagle Forum, by Phyllis Schlafly, January 8, 2014:

The Democrats have selected raising the minimum wage as THE issue to protect them from public opposition to the Obamacare fiasco which is dimming their prospects for retaining the Senate in the 2014 elections. But raising the minimum wage may actually be worth considering if it has the side benefit of cutting the gigantic total of our hidden welfare programs.

Yes, hidden. We call the welfare state “hidden” because most people have no idea that it has grown to nearly a trillion dollars a year. And most people think “welfare” goes all or mostly to the unemployed, whereas the truth is that most of it goes to working families whose income is below a government-designated poverty line.

The hidden welfare state has mushroomed into a massive complex of at least 79 means-tested programs doled out by at least nine federal agencies, plus state funds. Included in this welfare total are food stamps (for which spending has doubled since 2007), TANF, the Earned Income Tax Credit, housing aid, energy assistance, child care, and Supplemental Security Income, not even counting the new subsidies in Obamacare.

Since the end of the Reagan Administration, our $937 billion in welfare handouts have grown beyond any relation to actual need. So-called welfare has grown faster than growth in our economy, our population increase, the rise in the poverty rate, and annual federal expenditures on defense, education, Social Security, or Medicare.

Seventeen years after Bill Clinton said “we are ending welfare as we know it,” welfare spending as a percentage of our national output has nearly doubled, from 2.2 percent of GDP in 1989 to 4.3 percent in 2013. People who earn wages near the poverty level supplement their incomes with an array of federal benefits, including food stamps, Medicaid, child care, and cash wage subsidies, plus school lunch (and breakfast) for their kids.

All these programs and handouts are based on someone’s income level. If raising the minimum wage raises the individual above the government-prescribed poverty level, raising the minimum wage could be a benefit for taxpayers.

Robert Rector of the Heritage Foundation, the country’s expert on welfare statistics, has concluded that: “Since the beginning of the War on Poverty, government has spent $19.8 trillion (in inflation-adjusted 2011 dollars) on means-tested welfare. In comparison, the cost of all military wars in U.S. history from the Revolutionary War through the current war in Afghanistan has been $6.98 trillion (in inflation-adjusted 2011 dollars). The War on Poverty has cost three times as much as all other wars combined.”

Rector says that 100 million Americans now receive benefits from at least one of the 79 programs. The bipartisan welfare reform of 1996 actually reformed only one of the 79 programs, and Barack Obama gutted the heart of that reform by illegally eliminating the “work” requirement.

The temptation to cheat is always present. The Census Bureau reported that one quarter of single moms receiving generous taxpayer cash and benefits actually have a partner living in the house whom she doesn’t marry (and doesn’t report) because marriage would reduce her government handouts.

The EITC (Earned Income Tax Credit) lifted 5.7 million wage earners above the poverty line in 2011, but the EITC is full of all sorts of fraud. The Treasury’s inspector general reported that more than $110 billion in payments were given out during the past decade to people who were not qualified.

Welfare pays more than a minimum-wage job in 35 states, according to a Cato Institute study, and welfare in 13 states pays more than $15 an hour. Remember, welfare benefits are tax free, so their dollar value is even greater.

Legislation to raise the minimum wage would elevate many low-wage earners above the income threshold that qualifies them for benefits and should result in reduced welfare spending. That’s a tradeoff Republicans could support.

A good example of how our so-called welfare program is subsidizing and incentivizing bad behavior was illustrated on Sean Hannity’s May 11, 2013 TV interview with a young man who fathered 22 children with 14 different mothers. The U.S. taxpayers, of course, are supporting them all.

The man was proud of his achievement, didn’t have a job, didn’t pay child support, believes it is the duty of the taxpayers to support them all, and defiantly looks forward to creating more kids with more women. Our welfare system makes this travesty possible; it’s much worse than the famous “welfare queen” who became notorious back in 1976.

In order to reduce our slide into massive dependence on government, Congress should restore effective work requirements, tighten eligibility requirements, aggressively go after fraud, and make large cuts in total spending on handouts. Raising the minimum wage might make it possible to legislate fair and sensible improvements.


“The Conservative Case for a Higher Minimum Wage”,, by Ron Unz, February 3, 2014:

Over the last couple of months the minimum wage has moved into the political headlines, but most of the arguments for raising it have come from liberals. That’s fine, but since I’m not a liberal, I’d rather focus on the conservative reasons for supporting a much higher minimum wage, which are just as compelling.

Cutting Social Welfare Spending and Reducing Hidden Government Subsidies

Each year the American government spends over $250 billion on social welfare programs for the working-poor, individuals who have jobs but can’t survive on their wages. This funding represents a hidden government subsidy to low-wage businesses, allowing them to shift the burden of their low-wage employees over to the taxpayer.

A much higher minimum wage would force these businesses to stand on their own two feet and cover the costs of their own workers. Once those workers were no longer so poor, they would automatically lose eligibility for many anti-poverty programs, saving the government huge amounts of money. For example, establishing a $12 per hour minimum wage in California would save American taxpayers billions of dollars each year.

Increasing the value of work, cutting social welfare spending, eliminating hidden government subsidies, and saving taxpayer dollars have always been important goals of conservatives and free market advocates, and a higher minimum wage achieves these.

Boosting Consumer Spending and Economic Growth

There’s no such thing as a free lunch and if a higher minimum wage dramatically raises the incomes of millions of American workers and saves taxpayers many billions of dollars in social welfare costs, someone somewhere must be paying the bill.

The low-wage jobs impacted are generally in the non-tradeable service sector, so very few of them can be outsourced and they are very difficult and expensive to automate. The workers would keep their jobs at much higher pay, while their employers would simply pass along most of the increased labor costs to their customers in the form of higher prices. But the resulting price hikes would be so small that most consumers probably wouldn’t even notice them.

For example, Walmart is America’s largest low-wage employer, and Walmart could accomodate a $12 per hour minimum wage by a one-time price hike of just 1.1%, costing their typical shopper an extra $12.50 per year. The cost of a McDonalds cheeseburger would increase by only a dime to cover the extra labor costs and the grocery prices of American-grown agricultural products would rise by less than 2%. Across all goods and services, prices would increase by an average of less than one percent, one time.

Meanwhile, a $12 minimum wage would boost the incomes of low-wage households by around $150 billion per year, and those are the households that spend every dollar they earn. Their additional dollars would go right back to Walmart, McDonalds, and all our other businesses, providing a huge fiscal stimulus funded entirely by the private sector. Over the last few years, the consumer spending that drives our economy has lagged, preventing our economic recovery from really taking hold, and a big minimum wage hike would help solve that problem.

I think that raising the American minimum wage to $12 per hour would probably be one of the best things that ever happened to Walmart and many of our other large retailers.

Turning Tax Recipients into Tax Payers

During the 2012 presidential election, Republican Mitt Romney was vilified for pointing out that 47% of voters pay no income taxes and therefore aren’t attracted to the conservative message of making government more efficient and cutting taxes. He had a point. But a big minimum wage hike would go a long way toward solving that political problem by turning many millions of net tax recipients into net tax payers.

If the minimum wage were raised to $12 per hour, every full-time worker would be earning at least $25,000 per year, with $50,000 for a couple. At those income levels, most workers would be paying taxes to the IRS while also losing their eligibility for many government programs. Once such voters are sending checks to the government rather than receiving them, they would become much more receptive to the political themes of the GOP.

Reducing Illegal Immigration

According to the PewResearchCenter, there are around 11 million illegal immigrants in America and almost all of them came here for jobs. Business lobbyists and many Republican politicians claim that nothing can be done about illegal immigration because “they take the jobs that Americans won’t.”

They’re right about that, but the reason Americans won’t take those jobs is that the wages are just too low. Often the only workers willing to accept such poverty-level wages are recent border-crossers, desperate for work at any pay. If the minimum wage were raised to $12 per hour, many Americans and legal immigrants would apply for those same jobs, reducing the pressure on businesses to violate our immigration laws by hiring workers who shouldn’t be here in the first place. And once the magnetic lure of jobs disappeared, illegal immigration would be greatly reduced.

Valuing Work over Welfare

These days too many Establishment Republicans have suggested that the solution to America’s poverty problem is more welfare spending. A few weeks ago former Reagan economic advisor Martin Feldstein took to the op-ed pages of the Wall Street Journalto argue that our government should merge wages and welfare into a single, seamless system aimed at eliminating poverty. The favored solution of all these Republicans is a large increase in the Earned Income Tax Credit (EITC), which is just a welfare program, in which the government sends checks to poor families in order to make them somewhat less poor.

Meanwhile, most Democrats are supporting a much higher minimum wage, which would automatically cut EITC welfare spending.

I think America is at a sad point when the political heirs of Ronald Reagan believe the solution to our poverty problem is more welfare spending while the political heirs of the Great Society are supporting efforts to make work pay and to cut welfare.

Conservatives for a Higher Minimum Wage

For years I’ve joked with my friends that the conservative case for raising the minimum wage is so overwhelmingly strong that I’m worried liberals might eventually change their minds on the issue and begin advocating a cut in the minimum wage.

In the past, divisive partisan politics has done a great deal of damage to California, and we would all benefit from finding a political cause that could unite all Californians. I hope that liberals and conservatives, Democrats and Republicans could come together in a bipartisan coalition to support raising our minimum wage to $12 per hour.Over the last few weeks prominent conservatives such as Phyllis Schlafly and Bill O’Reilly have endorsed a much higher minimum wage and a leading economic writer at National Review did the same several months ago. The Daily Caller, one of the most widely read conservative publications, recently ran a 2,500 word article highlighting all the important conservative reasons for supporting a minimum wage hike, and numerous rightwing pundits have been saying the same things on their websites for the last couple of years. I’m very glad that more and more conservatives are now coming around to supporting the conservative side of this issue, joining liberals who are supporting a wage hike for all sorts of liberal reasons.

For an alternative argument on this contentious subject, see3 Reasons the $15 minimum wage is a bad way to help the poor.

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