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The sad death of the minimum wage, and how to save it the George W. Bush way

It took the Great Depression to break business opposition to a federal minimum wage, but 75 years since Franklin D. Roosevelt signed it into law, even capitalists are starting to pine for a higher minimum wage in the United States. But the country is no closer to seeing an increase from the current $7.25 per hour.

The case for raising the wage floor argued by venture capitalist Nick Hanauer and abetted by Reuters columnist Felix Salmon, is straightforward: More purchasing power for consumers would help stimulate the slow-moving US economy and fill public coffers. It would also strike a blow against income inequality. Adjusted for inflation, the minimum wage peaked in 1968, at $10.25 in today’s dollars, and the annual income of $15,080 guaranteed today still leaves a household of two below the poverty line.

This spring, US president Barack Obama proposed to raise the minimum wage to $9 an hour by 2015; Democrats in Congress have written legislation that would take it to $10.10 in the same period. (Hanauer would prefer $15.) But the idea of raising the minimum wage at all has died in Congress, killed by the opposition of senior Republicans and a crowded legislative agenda dominated by immigration reform and investigations. Obama’s White House has done little to lobby for the policy, with a planned speech by the vice president to mark today’s anniversary demonstrating the proposal’s second-fiddle status within the administration.

Economic cases against raising the minimum wage tend to vary: Some economists say that a higher minimum wage causes unemployment among low-skilled workers, if businesses can’t afford the new labor costs, while other studies say there are no discernible effects on employment. Perhaps the most sophisticated approach (pdf) is to consider the minimum wage as a complement to other anti-inequality programs like the earned income tax credit.

Still, the last time the minimum wage was increased, in 2007, Republican president George W. Bush signed the bill. That suggests a bipartisan solution could be found, and offers a hint as to how.

Republicans now support some version of immigration reform because their party is having trouble attracting Hispanics and is seen  as the party of the super-rich. Immigration reform could help address that perception, and so could raising the minimum wage. In fact, those Republicans concerned that immigration reform will temporarily lower the wages of un-skilled workers might find a higher minimum wage is a straight-forward fix.

It’s hard to think of a better law for Republicans to burnish their populist credibility before they spend the fall hammering on for lower taxes and less  spending.

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