Roundup: Party line politics divide U.S. over study hammering California's minimum wage increase

by Peter Mertz

DENVER, the United States, Dec. 18 (Xinhua) -- California's minimum wage will jump to 11 U.S. dollars in less than two weeks and to 15 dollars by 2022, a dramatic hike that has U.S. conservatives crying across the country.

The Employment Policies Institute (EPI), a well-funded, conservative economic policy group, predicted in the past week that California could lose 400,000 jobs when the policy goes fully into effect in four years.

HIGH ATTENTION, HEATED DISCUSSION

The Washington, DC-based think tank's study saying that raising the minimum wage will spell economic turmoil for California has sparked heated reaction and media attention from coast to coast.

"You can't legislate the free market -- when you force prices or wages on an industry, unintended consequences are guaranteed to happen," Al Rickard, a Washington, D.C. political insider, said Monday.

"In this case it means fewer jobs and higher unemployment, costing the state more in unemployment payouts, and swelling the welfare rolls," said 61-year-old Rickard, who used to be a Republican during former U.S. President Ronald Reagan's time in the White House from 1980 to 1988.

"If that is the desired effect, then the state will succeed," Rickard told Xinhua.

Conservative economists have echoed Rickard's message in a consistent voice for 30 years, and the release of the study by professors from Trinity College and the University of Florida went viral on U.S. media.

More headlines of "400,000 jobs lost" popped up online Monday in the state of California.

"Such media pandering," commented Seattle attorney and former Washington policy wonk David Richardson. "It's funny how the Trump Administration has coined the term, 'fake news,' because this is as fake as it gets, and the U.S. media is gobbling it up like stale, dry Thanksgiving turkey."

Founded at the end of Republican George Bush's Administration to defend conservative policies concerning employment, the EPI opposes any minimum wage increases.

However, studies by reputable economists indicate the opposite of what the EPI contends.

A 2013 Center for Economic and Policy Research (CEPR) review of multiple studies since 2000 said there was "little or no employment response to modest increases in the minimum wage."

In 2014, the CEPR also noted that the state of Washington, with the highest minimum wage in the country, had a job growth rate 0.3 percent faster than the national average, flipping anti-minimum wage arguments.

"Washington State has emerged as an actual example of this contentious issue being played out right now," Richardson told Xinhua on Monday.

"We passed laws to protect and help the underpaid and overworked working class American, and it hasn't hurt anybody," he said.

TEST-TUBE STATE

The EPI first gained national recognition when it opposed a 1992 study by two professors of Princeton University that employment increased slightly in New Jersey among fast food establishments, when the minimum wage was increased from 4.25 U.S. dollars to 5.05 dollars per hour.

Almost three decades later, the EPI, located in a tiny Washington, D.C. office with a big budget of 2.2 million dollars, produces a constant stream of studies refuting the benefits of paying more to America's poorest workers.

"One might argue that a higher minimum wage is justified in California because of its relatively high cost of living compared to the typical state," said the EPI report.

"On the other hand, one might be concerned about whether the higher minimum wage in California causes job loss for low skilled workers, and whether the effects differ in the cities where the cost of living and wages are relatively high as compared to rural areas or less expensive cities," said the report.

"This study is garbage -- funded lies by rich Republicans to justify the ridiculous and widening gap between the rich and poor in America," said Richardson. "It's message manipulation by sleazy Republican ideologues who care more about profit than people."

California has consistently raised the minimum wage since 2001, and "past minimum wage increases in California have caused a measurable decrease in employment among affected employees," according to the EPI report.

"Baloney, pure baloney," said John Ott, a businessman from San Luis Obispo of the Golden State, "this study comes from economic academics who probably have never worked in a real business one day of their lives."

"It's all skewed theory that appeals to their greed. Owners get tax breaks relating to payroll, so a few dollars more paid to a guy who needs more to pay the bills isn't going to break the boss's bank," said Ott, 58, a former printing shop owner.

Ott said the salary increase money will "go back into the economy anyway," and he disagreed specifically with one sentence in the EPI study's conclusion.

"A 10-percent increase in the minimum wage would cause a nearly 5-percent reduction in employment in an industry where one-half of workers earn wages close to the minimum," said the study.

The study says there will be a 4.1-percent decline in employment and roughly half of the job losses would occur in the retail trade and food services sector.

"That completely depends on the economic sector," Ott told Xinhua.

"It's irresponsible and inaccurate to lump all retail trade and food service into a category - California restaurants won't be impacted by this," he said. "This is only one thing that invalidates the study."

Meanwhile, data from Washington State, with the highest minimum wage in the nation, shows overall no harm done.

This Democratic-controlled, Northwest corner state has been setting the national standard since it passed graduated minimum wage hike laws three years ago.

Washington pays workers a minimum 11 dollars an hour, which will rise to 11.50 dollars in 2018, and 15 U.S.dollars per hour in the next few years. Thus far the move has received mixed reviews.

In June, a study from University of Washington found the hike could hurt workers in Seattle because workers are having their hours reduced at a rate that exceeds the increased wages.

Last month, however, a report from University of California, Berkeley showed that Seattle's wage bump increased the spending power of poorer wage earners while having little impact on employment.

Seattle city officials asked both studies to examine the impact the policy is having during its phase-in, and California is watching closely, with the new law starting in less than two weeks -- on Jan. 1, 2018.

U.S. POLITICAL DIVIDER

The United States' first minimum wage laws were enacted 100 years ago by 13 East Coast states after Massachusetts suggested in 1912 to protect women and children from unreasonable pay practices. The issue has become a political hot potato ever since.

It has also become a defining issue between conservatives and liberals, as a recent survey shows 90 percent of Democrats support a minimum wage hike while Republicans have traditionally blocked attempts to increase it.

Conservatives argue that raising the minimum wage hurts businesses operation to their maximum efficiency and actually slow down employment and economic growth, while Democrats say it allows workers to survive.

"You can't survive on 15 dollars an hour," Ann McDermott, a businesswoman from Aspen, Colorado, told Xinhua.

"Minimum wage has not come close to keeping pace with inflation - it's ridiculous the Republicans won't give the hard working, poor person a break," she said.

National polls indicate that a majority of Americans widely support a minimum wage hike.

A Pew Center survey in 2014 said that 73 percent of Americans supported raising the minimum wage from 7.25 dollars an hour to 10 dollars an hour.

But for 30 years, Republican-controlled Congresses have shot down attempts by last three Democratic presidents to raise the minimum wage.

In 2014, Democrats introduced a bill that was strongly supported by former President Barack Obama to raise the minimum wage to 10.10 dollars,but it was fiercely opposed and then defeated by Republicans.

Ironically, in four Republican controlled states of Alaska, Arkansas, Nebraska and South Dakota later that year, voters denounced GOP wage freezers by voting for ballot initiatives to raise their states' minimum wage above the national rate of 7.25 dollars per hour.

During the Reagan Years from 1980 to 1988, the minimum wage was frozen at 3.35 dollars per hour, the longest wage freeze then in U.S. history.

It jumped to 5.15 dollars per hour in 1997 during Democrat Bill Clinton's presidency, but then froze again for another time record after Republicans took control of the Congress in 1996 and also during the George Bush presidency until 2007. Enditem