Not All Democrats Want a Higher Minimum Wage

President Obama's proposal to raise public-sector wages won't make all Democratic taxpayers happy.

With limited time left to advance his economic agenda, President Barack Obama is looking for ways to go around a Congress that won't go along with his plans. He's gotten the same answer he's been getting for a while: Use executive orders to accomplish what legislation won't. Tonight's State of the Union address will propose, among other things, raising the minimum wage to $10.10 an hour for government contractors hired in the future. The progressive caucus, which has been pushing this idea, estimates that would affect more than 2 million workers.

There's no estimate of what this would cost the government. When I tried to generate one, I quickly gave up, because I have no idea what it means to say that this will "affect" more than 2 million employees, or what those employees might be paid right now. Some back-of-the-envelope doodling suggests that it will probably cost the government a lot in actual dollars, but not that much per U.S. citizen. Which way we should look at it is left as an exercise for the reader.

As commentators have pointed out, this is the act of an administration that has given up on big moves. Though Obama will be promulgating this executive order in the context of a broader call for Congress to raise the minimum wage, he does not have the political muscle to force that through. Democrats can speak hopefully of a new populist moment centered on proposals such as a higher minimum wage, but this is the third or fourth time that the president has attempted to launch a new populist, progressive moment. So far, all of his policy rockets have fizzled out on the launchpad, and there's little reason to think that this will finally light a fire under Congress. So he's taking symbolic action within his legal power.

But this is not just about a split between Democrats and Republicans; it's also about a growing split within the Democratic Party over what government jobs are for. Virtually everyone in the party used to support strong public-sector unions and jacking up public-sector wages. But as budgets have tightened, pensions have begun to crowd out other spending, and the public-sector unions became an increasing obstacle to reform, tension has mounted between providing more government services (or even the same level) and giving government workers generous pay packets, gold-plated retirement benefits and nearly ironclad protection from pink slips.

In yesterday's Washington Post, Charles Lane elaborated on that conflict:

All members of the public use schools, roads, parks and other government services -- and pay taxes to support them. Their interest lies in receiving the highest-quality services at the lowest feasible cost. Period.

Public-sector unions interfere. They demand more pay and benefits, and more control over the workplace, than the people's elected representatives might choose if they were answerable only to voters.

Indeed, political war chests accumulated through dues checkoffs and agency fees give public-sector unions more influence than ordinary voters in many states and counties. At contract time, they face their political allies across a bargaining table. That table, by the way, is behind closed doors; collective bargaining is often exempt from "sunshine laws" that cover other public business.

Defenders of public-sector unionism argue that it reduces costs and improves quality by ensuring "labor peace" -- or, avoiding strikes and creating a happier, better-trained workforce.

But that's getting to be a harder argument to support -- internally or with the public.

At a time of great economic insecurity, it's not great politics to make government workers the "haves" of the labor market: paid above-market wages and shielded from the chronic risk of job loss that most of the rest of America faces. Oh, sure, this is true for everyone -- professionals often have to take a pay cut to work for the government. But to the average person sweating it out through rounds of layoffs at a job they don't like very much, government workers seem to have it very good by comparison.

You can argue that instead of racing to the bottom, we ought to bring everyone into the generous pensions, wages and work protections that government workers enjoy. But Joe Taxpayer doesn't have any way to do that (and countries that try to protect all their workers from being fired generally find that companies are reluctant to hire them in the first place). Absent some miracle cure by which everyone in the U.S. makes above-average wages, Joe Taxpayer seems increasingly uninterested in taking extra money out of his paycheck to make sure that some government employee gets more money in theirs.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

    Megan McArdle writes about economics, business and public policy for Bloomberg View. Follow her on Twitter at @assymetricinfo.

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