The Wages of Morality

What a difference a year makes.

If anyone had predicted one year ago, at the triumphant finale of the Republican’s 100 days, that the 104th Congress would pass an increase in the minimum wage, they would have been tested for Mad Pundit Disease. Yet, there is now majority support in both chambers, and an increase will only be prevented if GOP leaders refuse to permit a vote. In a sure sign of a changing political climate, 23 Republicans from the House--the Jacobin nerve center--came out for a hike 10 cents more generous than that proposed by President Bill Clinton.

The issue has thrown Senate Majority Leader and presumptive GOP nominee Bob Dole badly on the defensive. He first stated his strong opposition and maneuvered to block a straight up-or-down vote. His position last week--it’s a work in progress--is that an increase is bad policy, but it will pass because it’s politically popular, so he plans to load it up with amendments that Democrats and organized labor will hate, and may even end up supporting the bill. In other words, political opportunism is the only reason for a “yes” vote, and you can probably count him in.

Dole appears to have scored a reverse hat trick, losing on three fronts: letting down his small-business supporters; displaying the insider gamesmanship that makes him such a successful legislator, but which the public despises, and still permitting Clinton to portray him as a minimum-wage opponent come the fall.

While the minimum-wage fight has mostly been covered as a strategic failing of Dole’s presidential campaign, he has backtracked for good reason: Public support for a minimum-wage hike has become nearly universal. It has crystallized broader anxiety about stagnant incomes, and given it a clear political focus. The potential 1996 electoral significance of the minimum wage is substantial, but the current debate may be a harbinger of something larger: a social movement devoted to raising workers’ living standards and a historic shift in the nation’s political landscape.

The public’s support for a higher minimum wage is based on a simple moral proposition: People who work should make a minimally decent living. The current minimum wage fails that test. In focus groups, people are often incredulous on learning the current minimum is only $4.25 an hour, and find it absurd to think a family could get by on $8,800 a year. In the public’s mind, the minimum wage is less an economic policy measure than a statement about our values as a people, and the kind of country we want to be.

The economic evidence also supports the public’s instinctive judgment. Today’s minimum wage is only 36% of the average wage, while, historically, it has been set at about 50% of the average. It used to be that a year-round minimum-wage job would keep a family of three above the poverty line, but now such a family lives 29% below the poverty line. Indeed, the 90-cent increase being considered is modest--it would take an increase twice as large just to regain the purchasing power the minimum wage had during the 1970s.

The short-term impact of this moral consensus is to put GOP candidates who oppose an increase at risk. Democratic pollsters Maren Hesla, who has researched the issue in the Midwest, and Mark Mellman, who has surveyed California voters, have found strong evidence that this can be a defining political issue. For example, when California survey respondents are told Clinton’s and Dole’s positions on the minimum wage, Clinton’s lead in the race increases significantly.

Voters are genuinely shocked to learn a candidate would oppose the minimum wage, and conclude such candidates are profoundly out of touch with the hard economic facts of life.

What gives the minimum-wage issue even greater long-term significance is that it represents a collision between people’s moral intuition and their belief in laissez-faire ideology. Americans generally accept the notion that firms should set wages in a competitive market, free from government intervention. But they also believe it is wrong for people to get paid poverty wages. In this case, the moral imperative is so strong, and the status quo so obviously unfair, that ideology is forced to take a back seat.

Nor is this moral-analytical dichotomy limited to the minimum wage. When focus-group participants discuss today’s economy, they often speak in moving terms about the impact of corporate downsizing and outsourcing on their families and communities. They increasingly resent corporations’ lack of loyalty to workers and readiness to abandon communities--even the nation--in pursuit of lower labor costs and higher profits. The central political question today is whether, and how, the public will resolve the increasing dissonance between their moral reasoning and their economic analysis. When everything seems to be in compliance with accepted economic theory, but outcomes are sufficiently at odds with what seems right, then the theory may be called into question. This is how big ideological shifts occur: when dominant assumptions can no longer be squared with undeniable moral or social facts.

For the past two decades, laissez-faire ideas have been virtually hegemonic in public discourse. We have such periods in U.S. history--the Gilded Age, the Roaring ‘20s, the Eisenhower ‘50s--when what’s good for business is understood to be what’s good for the nation.

Invariably, though, change comes. Maybe because the rich and powerful, given a free hand, get a little greedy and overreach, or simply because the market alone proves incapable of addressing some critical social problem. And so we turn to government to stimulate the economy or to protect the environment. If the laissez-faire consensus is indeed starting to weaken, we would expect to see a new progressive politics emerge, as followed earlier pro-business eras. These progressive impulses have not rejected basic free-market principles, but have challenged the radical laissez-faire philosophy of their day.

Today there are some intriguing, though far from definitive, signs of just such a progressive revival. It can be seen in recent calls by Labor Secretary Robert B. Reich, House Minority Leader Richard A. Gephardt (D-Mo.) and others for new conceptions of corporate responsibility and accountability. They contend that America’s unwritten social contract--if you work hard and are loyal to the company, it will take care of you--has been torn up and new rules are needed. Proposals are under consideration to encourage or require companies to raise wages when profits increase, keep good jobs in America and provide health care and retirement benefits. The recent 100-0 Senate approval of the Kennedy-Kassebaum bill prohibiting health insurers from denying coverage due to pre-existing conditions is another sign of public willingness to set limits on corporate behavior.

The intellectual core of this new progressivism is re-establishing the importance of government as a rule setter for the economy. Government’s job, in this view, is to establish limits on acceptable behavior, and then step back and let competition and free markets work. The minimum wage is a perfect example, as it pushes business to compete to improve service and efficiency--which benefits everyone--instead of having the lowest labor costs.

A grass-roots political movement devoted to improving workers’ living standards may also be emerging; 25 cities and states now have organized “livable wage” campaigns, many that will put ballot initiatives before voters this fall. Californians will have the opportunity to raise the state minimum wage to $5.75 an hour by 1998. Others go beyond the minimum-wage issue, such as requiring companies to pay a living wage to qualify for government contracts. The principle here is that public tax dollars should not go toward undermining our living standards. The newly revitalized AFL-CIO recently invited leaders of these local and state initiatives to Washington to share strategic insights and hopes these isolated efforts will become a broader movement. The labor federation also has its own “America Needs a Raise” campaign, which will hold public hearings in 30 cities over the next two months. They have run TV ads in the districts of House members who voted against the minimum wage, informing their constituents of this. Some of these members, coincidentally enough, have since discovered the merits of a higher minimum wage.

All this is still far from a historic watershed, of course. Public support for a higher minimum wage is still the exception, not the rule--people still generally accept laissez-faire assumptions, despite their uneasiness with recent economic developments. People feel in their gut that something wrong is going on, but they think it’s not politically correct to evaluate business decisions in moral terms. What has been missing, until recently, is public leadership that gives them permission to question economic orthodoxy. Patrick J. Buchanan’s economically populist campaign, ironically, may have opened the floodgates. The media have focused attention on downsizing. Now some labor and political leaders are stepping forward.

On the other side, some conservatives are determined to engage the ideological battle over a higher minimum wage--despite the short-term political costs. Many are disconsolate that Dole abandoned this fight so easily. Rep. Dick Armey (R-Tex.) even broke ranks with House Speaker Newt Gingrich (R-Ga.) when Gingrich indicated he might support an increase.

But it may be too late--at least in terms of the minimum wage. In the court of public opinion, this is a settled question. Rush Limbaugh, who usually seems to have a sixth sense for staying in tune with the political zeitgeist, seems surprisingly off key on the minimum wage: “It’s an absolute boondoggle . . . any wage arbitrarily chosen by the government and then forced on private business is anathema to a free market and conservatism.”

That contradiction may be real, but forcing its resolution--when four out of five voters believe a higher minimum wage is a moral necessity--may have exactly the opposite consequence conservatives hope for.*