Our small band of minimum wage activists joined the throng outside of Walmart in Mountain View, California, on Friday May 9 to try to catch the eye or ear of the President. We also wished to show our disapproval of this clear demonstration of the captivity of democracy to corporate forces. Many issues were represented that day: anti-drone, anti- Keystone XL pipeline, OUR Walmart and even anti-Obama. It was vibrant, exciting, and inspiring. A strong sense of solidarity pervaded. But we did not even catch a glimpse of Obama.

I am currently involved in a campaign to increase the minimum wage in Mountain View. The campaign has been opposed by unexamined economic thinking and neoconservative political ideology. Right-wing politicians at all levels seem blinkered in their economic views with a wilful ignorance of the full complexity of the economic arguments.

This view is reflected in the response I received from a Mountain View council member opposed to increasing the minimum wage. He argued that “low skill jobs are not intended for long-term employment with a guaranteed minimum income… Most of those who earn more income get education, job training, improve language proficiency and perhaps take second jobs.” Since the Great Recession, low-wage jobs have grown nearly three times as fast as better paying jobs, according to the National Employment Law Project. The reality is that low income employment is a growing part of the US economy.

He also claimed:

“There is no reasoned economic justification for politicians to selectively manipulate free exchange in business and employment by imposing arbitrary minimum wage rates or other price controls.”

Such hands-off economic thinking spectacularly crashed the economy in 2008 and ordinary people have still not recovered. After 30 years of deregulation of the financial sector under the auspices of neoclassical economics, the US economy is limping along. How is it that these principles still run the global economy?

Ordinary people have still not recovered from the Great Recession. In March, the Organization for Economic Cooperation and Development’s report “Society at a Glance” stated that poorer households have lost greater shares of their incomes than the better-off or benefited less in the recovery, young people are at greater risk of poverty than before the crisis, and the share of people who report that they cannot afford to buy enough food increased in 23 countries, particularly in Greece and Hungary, but also in the United States.

Record-high numbers of Americans are living in poverty.^[1] In 2012, 46.5 million (one in seven) people were living in poverty in the United States—the largest number in the 54 years the Census has measured poverty. The poverty rate (the percentage of all people in the United States who were poor) also remained at high levels: 15% for all Americans and 21.8% for children under age 18.[2] The Center points out that the poverty threshold is not representative of what a family actually needs for a decent living. However, the wealthy and big corporations are doing nicely. Walmart executives gave thumbs up to the crowd as they left the Presidential event.

By contrast, protesters were kept at least 500 feet away from the entrance to Walmart which was barricaded by a metal fence and security guards. In a similar manner, when the people ask to be rewarded fairly for their labor and to share in the new wealth being generated, the response most of the time is a resounding “No!” Last week, Senate Republicans blocked a measure that would have raised the federal minimum wage to $10.10 an hour over the next three years, up from the current rate of $7.25 an hour. It would have been the first hike in five years.

Republicans claimed to have rejected the wage rise based on a report from the Congressional Budget Office, which estimated that raising the minimum wage from $7.25 an hour to $10.10 would result in the loss of 500,000 jobs. They chose to ignore estimates which said that about 25 million workers would get raises and 900,000 people would be lifted out of poverty.

John Schmitt from the Center for Economic and Policy Research argued that the media over emphasized the number 500,000. He contended that in his review of several past CBO evaluations of the minimum wage that the inclusion of zero (a “very slight decrease”) in the likely range of employment effects was “completely unprecedented.” Schmitt stated:

“Including zero in the range of plausible employment outcomes –for the first time ever– ought to feature more prominently in the discussion of the report and in the evaluation of the proposal on the table…”

Other research which has questioned the standard economic maxim that raising wages causes job losses includes David Card and Alan Krueger’s famous 1992 paper “Minimum Wages and Employment.” This paper compared unemployment among fast food workers in New Jersey and Pennsylvania before and after New Jersey raised the minimum wage. Card and Krueger found no effect.

Arin Dube, Associate Professor of Economics, UMass Amherst (currently visiting Economics Department at MIT), in his testimony at the Senate Health, Education, Labor & Pensions committee hearing on minimum wage and indexation on March 14 stated that for the range of minimum wage increases in the U.S. over the past two decades, recent evidence based on credible methodologies do not find job losses of any sizable magnitude. Most surveys and meta-analyses have also concluded that employment effects are small. This is why more economists today tend to support increasing and indexing than oppose it— even though there is scholarly disagreement on the precise impact. The academic disagreements are over no job losses or small job losses for highly impacted groups. John Schmitt of the Center for Economic and Policy Research states that the idea that the minimum wage has essentially no effect on adult workers has long been close to the consensus view within the economics profession.

There are even arguments that increasing minimum wages will have beneficial economic effects. According to the Economic Policy Institute, if the minimum wage rose to $10.10 per hour, 27.8 million workers would see their wages go up. These workers would spend the additional $35 billion in wages, generating an extra $22 billion in economic growth. The growth in the U.S. economy would result in about 85,000 new jobs. Republican seem blinkered in their economic views with a wilful ignorance of the full complexity of the economic arguments.

Poverty has devastating long-term effects for health, education, and employment outcomes. Rucker C. Johnson, University of California, Berkeley, and Robert F. Schoeni, University of Michigan, in 2007 found that poor health at birth and limited parental resources (including low income, lack of health insurance, and unwanted pregnancy) interfere with cognitive development and health capital in childhood, reduce educational attainment, and lead to worse labor market and health outcomes in adulthood.[3]

The argument that governments have no role in regulating the market, which is a standard on the Right, seems to have no place in a representative democracy. Politicians are elected to represent the interests of the people, all the people. Politicians, captive to corporate interests like Walmart, choose to ignore this. The ideological fantasy that government has no place in economics epitomizes an abdication of political responsibility and is even anti-democratic. As Robert Reich points out, the government creates the framework in which economics takes place.

Of course Obama was cravenly bundled out the back door of Walmart so the denunciations of the people did not detract from the triumphalism of his corporate backers. Given that economic deregulation crashed the US economy in 2008 and the recovery has benefited the wealthy at the expense of everyone else, we need a new economic model. Piecemeal increases in the minimum wage are a band-aid solution that we must resort to in the face of obstruction by the powerful of any reforms of the current system. The people are entitled to reparations. Their savings, housing and future have been stolen by the wealthy who greedily guard their ill-gotten gains. It is not socialism for people to ask for fair returns on their labor. It is common sense.

[1] National Center for Law and Economic Justice Inc. report based on US Census Bureau figures released in September 2013

[2] The United States Bureau of the Census measures poverty by comparing household income to the poverty threshold for a household of a given size. The poverty threshold is adjusted each year to take account of changes in the cost-of-living.

[3] The Influence of Early-Life Events on Human Capital, Health Status, and Labor Market Outcomes Over the Life Course. February 2007 Rucker C. Johnson, Goldman School of Public Policy, University of California, Berkeley, Robert F. Schoeni, ISR, Ford School of Public Policy, and Department of Economics, University of Michigan.