Senator Marco Rubio (R-FL), in an appearance on Fox News made some bold statements to support his opposition to increasing the minimum wage. Since he anchored his opposition in history in part, it is worth looking at what history really has to say about it, and at the implied market solutions and rhetoric:
Well, first of all, I want to see people making a lot more than $9 an hour in the United States. And the way you do that is through rapid economic growth where people are being paid a lot more than that. $9 is not enough. I think we all would want that. The question is is a minimum wage the best way to do it? And history has said the answer is absolutely not. In fact, the impact of minimum wage usually is that businesses hire less people. That’s the impact of it. They’ll just hire less people to do the same amount of work…We have a lot of history to prove that the minimum wage , raising the minimum wage does not grow the middle class.
As it turns out, history has no such thing to say as he alludes. It is, like every citation of history by Republicans to validate their view, sheer rhetorical nonsense. In the 37 times the minimum wage has been increased since first instituted in 1938, increased unemployment followed only after 11 of the increases. The pathetic correlation of minimum wage increases to increased unemployment of 0.297 fails further when considering that only one of the increases in unemployment was not associated with an economic downturn attributable to other causes. That one instance was the end of WW II.
In fact, a significant body of research (PDF) has found no relationship to unemployment. Moreover, other research that examined data in states with minimum wages higher than the federal rate has shown job growth to be stronger in those states as well.
So much for Rubio's specious claims. What does history have to say about the more typical Republican rhetorical argument, a relationship to inflation? Albeit a significant number of economists fear inflation following an increase in the minimum wage, a study published in the Journal of Economic Review, "Consensus Among Economists: Revisited," found them to be in the minority.
This is a bit trickier, because inflation is almost a given in most years, and price deflation is an indication of economic downturn. This is evidenced by the 1.3 percent decline in the general price level in 1939—the year following first instituting a minimum wage. In each subsequent year following an increase in the minimum wage, inflation varied up and down by only a token amount—with a brief exception.
That exception was during the hyper inflation of the 1970s when the rate of inflation declined after the minimum wage increases in 1974 and 1976.
In the abstract, economic theory would of course support the notion of price increases to maintain the same level of profitability. An offsetting reality would however need to be ignored. Inflation, having erroded the buying power of low wage earners, will have reduced consumerism. By raising their buying power, the increase in buying power and resulting increase in sales offsets the reduction in profits related to the increased wage scale.
So what else does history and the reality of economic principal have to tell us about Republicans in general? History says that they know nothing about history—even those who claim to be historians. The history, since the 2008 crash, and economic principal tell us that they must fabricate an alternative reality to sell their position on tax policy. These academic disciplines tell us that Adam Smith's position on laissez faire was originally a critique on the kinds of government policies that conservatives favor, and that the arguments of the Austrian School of economics are nothing more than rhetorical nonsense that is based upon an absurd claim that can be substantiated only through very sophisticated rhetorical manipulation.
Recent history also tells us that Republicans are very selective about application of their beliefs. When government spending serves their agenda, they are all for it—and believe that it stimulates the economy!
Let's not say though that everything Rubio said was not true. His statement that "I want to see people making a lot more than $9 an hour in the United States. And the way do you that is through rapid economic growth where people are being paid a lot more than that. $9 is not enough. I think we all would want that" had some truth in it. Economic growth does generate increased employment, and $9 per hour is not enough. That is as close to the truth as he getsw though.
History also tells us that prosperity does not—and has never—provided a "market solution" that addresses the issue of poverty. As for the rest of that statement, let's ask history's opinion. Rubio misrepresented the effect of the Affordable Care Act in his response to the State of the Union Address. In fact, he made numerous misrepresentations during that speech, and has something of a history of difficulty getting his facts straight.
Oh, yes, Marco Rubio, history does speak loudly on the effect of raising the minimum wage, and it is shouting, "liar!
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