The buzz all around the media is of course how the Republicans won big in the Fall (2014) elections. Political parties ebb and flow, political fortunes rise and fall. So I don’t think that was the most interesting result of the Fall elections. Perhaps some others might think it is the change in attitudes and laws regarding drugs? Nope, not that either. Of course social morals change over time. What then? I think the most important and interesting thing that happened is that Americans learned how to control their employment contract. They learned that it is possible to give themselves a raise.
The minimum wage used to be the sacrosanct possession of the federal government. Sure a couple of high-cost states like New York might enact a bit of a larger minimum wage, but for the most part, the minimum wage was driven by the federal government, with the federal minimum wage hikes usually dragging up most states’ minimum wage. But the federal government has been taking its time. The last federal minimum wage hike was enacted in 2007 after being stagnant for ten years. The last of the three increases enacted then went into effect in 2009, five years ago. After much discussion about new concepts like a “living wage” in urban areas, fifteen of our fifty states approved minimum wage increases in 2014, either by ballot or by legislation, and a sixteenth had an advisory vote in favor of raising their minimum wage. Sixteen of the fifty sates is 32% of the country taking action on the minimum wage in 2014.
So America has learned how to control its work contract. Sure many people have put forth for a lot of years that increasing the minimum wage costs jobs, but the research and actual data has shown that modest increases in the minimum wage has no significant effect on employment. So the “fear factor” around raising the minimum wage has been drained from the system. And it appears as if Americans are tired of stagnant wages and are willing to take action. It is easier to get a state to vote for a change than it is to get a national change, so economic activists are taking the state route. And with the current gridlock in Washington, it appears to be the most effective route.
Could this movement grow? Why, of course. Suppose a state decides to increase wages even more, is it OK? Yes. Suppose they decide to make it more difficult to fire an employee, OK? Yes, in many circumstances. Suppose a state decides to limit pay to executives, is that OK too? A bit harder to do, but there might be ways to enact that too. So the danger of stagnant wages is the vote. Americans who think that wages have been too low for too long have acted through the political process.
I think that is the political lesson of 2014. I don’t know whether I agree or disagree with the trend, I am just an observer; but since I think this was the most interesting political development of 2014, I look forward to seeing how this develops in the future.