“Washington” is keeping wages down and impoverishing the American middle class, at least according to Ted Cruz, who has adopted economic populism as a line of attack against the political establishment as a routine part of his stump speech in recent months.
The Texas senator has tried to link rival Donald Trump to Democratic frontrunner and perennial enemy of the American right, Hillary Clinton. But the argument that the federal government, and by extension the Obama administration, was responsible for the decline in wages of American workers, was yet another baseless charged levied against a rhetorically-convenient “Washington establishment.”
Where to start. It’s unclear whether or not Cruz believes in a minimum wage. He has argued against a minimum wage, saying it leads to job losses among American minority groups. “Every time we raise the minimum wage, predictably what happens is a significant number of people lose their jobs, and they’re almost always low-income, they’re often teenagers, African Americans and Hispanics,” he said, voicing concern for demographic groups that are unlikely to vote for him anyhow, and for whom his policies don’t reflect the concern of his talking points.
In Cruz’s mind, the minimum wage is best left to the states. While he assails the loss of American jobs, sounding much like a vague, rehearsed mashup of Donald Trump and Bernie Sanders in their criticism of outsourcing, his policies have a different end in mind: employment above all else.
“I think it’s bad policy,” said Cruz on CNBC, criticizing the existence of a minimum wage. “And you know, one observation I make to folks is next time you go to a fast food restaurant and you start ordering on an iPad, you’re seeing the minimum wage.”
During a Senate hearing in 2014, Cruz spoke out against President Barack Obama’s proposed federal wage increase to $10.10. He said:
The undeniable reality, the undeniable truth, is if the President succeeded in raising the minimum wage it would cost jobs for the most vulnerable. The people who have been hurt by this Obama economy would be hurt worse with the minimum wage proposal before this body. In 2013 the President in his State of the Union address proposed raising the minimum wage to $9.00. Now a year later the request has magically changed to $10.10. The only reason (there’s no economic justification) the only reason is politics. And I suppose if the approval ratings of democratic members of this body continue to fall in another month we’ll see a proposal for $15.00 an hour and then maybe $20.00 or $25.00 an hour. But I think the American people are tired of empty political show votes. The nonpartisan congressional budget office says that raising the minimum wage could cost a loss of 500,000 to 1 million jobs.
Cruz is barking up the wrong tree. It is not the $7.25 an hour minimum wage that made companies like Carrier, whose managers were infamously recorded laying off 1,400 at its Indianapolis plant earlier this year, outsource those jobs to Mexico. As the Economic Policy Institute pointed out in a 2003 report, NAFTA resulted in a period of job growth in the U.S. between 1994 and 2000. But starting in 2001, jobs started disappearing. “Job losses have been primarily concentrated in the manufacturing sector, which has experienced a total decline of 2.4 million jobs since March 2001,” read the institute’s report. “As job growth has dried up in the economy, the underlying problems caused by U.S. trade deficits have become much more apparent, especially in manufacturing.” It pointed to systemic turmoil in internationalized labor markets, the result of free trade agreements, which allow companies to move to where living costs (and thus labor) are cheapest.
But for Cruz, the problem has always been the minimum wage, despite evidence to the contrary: Another EPI report released in 2013 outlining the benefits of increasing the minimum wage to $10.10 concluded, “Raising the federal minimum wage to $10.10 by 2016 would lift incomes for millions of American workers and provide a modest boost to U.S. GDP.”
Despite the doomsday predictions from Cruz and the rest of the 2016 Republican field, the report also predicted large increases in employment. By increasing the federal minimum wage to at least $10.10, low wage earners would experience a recovery of real income the likes of which we haven’t seen in decades.
However, the federal minimum wage has not budged by even a penny, leaving wage increases largely to states or large American cities, exactly the sort of decentralized political process Cruz would be expected to support: Los Angeles, San Francisco, Seattle have all instituted $15 per hour minimum wages following concerted efforts by local organizations that stemmed partly from frustration over partisan gridlock in Washington. Both California and New York’s governors signed bills this year approving wage increases to the $15 an hour benchmark over a period of time. A total of 29 states, and Washington, D.C., have instituted their own minimum wages exceeding the federal minimum wage, as a result of slow progress on the federal level.
Since the minimum was last raised to $7.25 in 2009, it has lost 8.1 percent of its purchasing power as a result of inflation, according to Pew Research. The OECD has described the American minimum wage as an outlier amongst wealthy, industrialized nations — it should really be around $12, if we were to use GDP per capita as a guide. American workers are in desperate need of a minimum wage increase, not just poorly paid employment.
Photo: U.S. Republican presidential candidate Ted Cruz speaks at a campaign event at Lakeside Plastics in Oshkosh, Wisconsin March 25, 2016. REUTERS/Mark Kauzlarich