'Minimum effort for maximum gain' - here's why we need to increase the minimum wage: Dennis Roddy

By Dennis Roddy

When Hurricane Rita tore through Beaumont, Texas 10 years ago, emergency workers told visiting journalists -- I was among them -- to stay clear of windows. We surmised that the 120-mile per hour winds would break windows and send shards of glass inside.

Dennis Roddy (PennLive file)

But the next morning, we found the windows blown into the street, as if the wind had pushed from inside.

The lateral column of air rushing between buildings caused the outside air pressure to fall so quickly that the inside air pressure blew the windows out, not in.

It's called the Bernoulli principle and one of the great examples of how intuition can fail us.

That's why it's worth thinking differently on the minimum wage.

Everybody naturally assumes that raising the minimum wage will increase unemployment because, after all, when anything costs more, we buy less, be it a pizza or an hour of labor.

In truth, it doesn't work that cleanly, and it probably never did.

Since 2000, eleven major studies have examined the question of whether an increase in the minimum wage causes job loss.

Depending on the economist, nearly every conceivable outcome has been suggested. One study even studied the other studies, trying to standardize the outcomes.

The general message anyone would take away from the research is this: the intricacies of the labor market go well beyond simple supply and demand.

The cost-benefit ratio of reducing poverty (a 10 percent rise in the minimum reduces poverty by 2 percent) versus keeping the cost of a burger from rising by a nickel (one study put it at 3 cents), is decided less by math than humanity.

In short, the minimum wage exists because 80 years ago we decided that the economy is here to serve the people, not the other way around.

The argument that an increase in the minimum wage would automatically crash the demand for labor, perversely hurting the workers it was intended to benefit, has been a favorite of opponents.

The sociologist Albert O. Hirschman called this the rhetoric of reaction. He wrote that arguments against policy changes were prone to turn on three themes: perversity, futility, and jeopardy.

The perversity would be a well-intentioned proposal harming those it was supposed to benefit. Futility would argue that it won't work anyway. Jeopardy says it will undo progress already made.

John F. Kennedy heard these same arguments from liberal advisors when he decided that a business tax cut would spark enough growth to raise revenues. Who expects a tax cut to create more tax dollars?

Yet, it did.

So go figure. Two studies, looking at states that border each other, discovered that when one raised its minimum wage, employment rates in each stayed the same, with a slight increase -- that's right, increase -- in the state that raised its minimum.

Critics argued that this study was too narrow, and reflected conditions only in those states. They would have a salient argument here except that one of the states was Pennsylvania.

Later, a trio of economists compared 1,381 counties across the country. They chose counties that bordered each other but in which one had a minimum wage higher than the other. The result: they found that the differential made no difference in employment levels.

The lesson is that economies have so many moving parts, and the people within them are influenced by everything that falls between greed and nobility, that raising the wage floor in Pennsylvania stands to help more people than it can possibly hurt.

If we were at 10 percent unemployment, the argument would be that this is no time to raise the price of an entry level job. At 5 percent, we're hearing this is no time to "slow" our progress.

At $7.25 an hour a mom with two children relies on food stamps and better never get sick. It's time to face it: with private sector unions nearing extinction, someone has to set the wage floor and there's nobody left but us.

There are no guarantees, save the unsavory status quo. All I can say is some glass needs breaking and a wage rise would push the shards in the right direction, away from the workers now sheltered from the storm in a house of poverty.

Dennis Roddy is a PennLive/Patriot-News opinion columnist. He writes from Pittsburgh.