Opinion

How the GOP blew it on the minimum wage

They have the perfect alternative in their backpocket — and they won't even talk about it

Does America have a functional center-right political party? There's cause for doubt.

For starters, the GOP frontrunner is Donald Trump, a candidate with apparently near-zero grasp of public policy or understanding of the core values that made America great. Okay, that's an obvious one.

Another piece of evidence is the growing success of the progressive Democrat "Fight for 15" movement to increase the minimum wage. Already the Democratic Party platform calls for a $15-per-hour national minimum. And now California is set to become the first state to adopt the $15-an-hour pay floor, a level previously enacted only in pricey big cities such as San Francisco and Seattle.

Make no mistake, this is a reckless economic experiment that risks hurting the financial well-being of the nation's working poor. To be sure, there is plenty of academic debate about the job impacts of minimum wage hikes. But those studies analyze the results of modest increases, not a massive jump in a state whose $10 minimum is already highest in the nation. As my AEI colleague Michael Strain recently said in a podcast I host, "A lot of workers in California will see their incomes rise... but a $15-an-hour minimum wage, even in a state like California, will result in a lot of harm to lower-skill workers."

Strain's comment echoes a similar warning from economist Alan Krueger, a former chairman of President Obama's Council of Economic Advisers: "$15 an hour is beyond international experience, and could well be counterproductive... Although the plight of low-wage workers is a national tragedy, the push for a nationwide $15 minimum wage strikes me as a risk not worth taking."

But plan beats no plan, as former U.S. Treasury Secretary Timothy Geithner liked to say. If you think minimum wage hikes will hurt the low-income Americans they're supposed to help — as Republicans almost uniformly do — what's the alternative? Well, boosting economic growth is always a good idea. This is typically the go-to response for Republicans. Of course deep structural reforms to raise the economy's growth potential (such as reforming the tax and regulatory code) and worker productivity (such as better training) may take awhile to pay off. And in an age of globalization and automation, the fruits of faster growth might not be adequately shared by all.

As it turns out, however, there's a really good and immediate way to help: Expand the Earned Income Tax Credit. It's the existing federal wage subsidy that economists agree is well targeted toward the working poor, boosting incomes and work. What's more, the EITC has none of the potential job market distortions that come with wage floors, such as making it more expensive to hire workers versus, say, using a kiosk to serve fast-food customers.

So faced with a well-organized campaign to dramatically increase the minimum wage, a competent center-right party would counter with a vocal, sustained push to expand the EITC or create some new wage subsidy. But that's not happening.

For instance: How often in all the GOP presidential debates have you heard the candidates talk about the EITC as a way to help the working poor? None. (I checked.) Even though there have been questions about the minimum wage and poverty, not once has a GOP presidential candidate mentioned expanding the EITC. That, despite some candidates — including Jeb Bush, Marco Rubio, and Ted Cruz — supporting it on their campaign websites.

One possible explanation: The 2016ers view the issue as a political liability in a Republican primary. It's government spending, after all. Safer to talk about "growth." True, House Speaker Paul Ryan supports EITC expansion, although he would pay for it by cutting other safety net programs. But the presidential race provides a unique, high visibility platform to promote the issue — and perhaps change how some people view Republicans. A recent Pew poll found 62 percent of Americans think the GOP favors the rich, versus 2 percent who chose the poor. If the GOP won't loudly and forcefully promote an effective policy that will combat poverty, it's hard to argue otherwise.

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