Seattle has rightfully made some news lately with a dramatic increase to the city’s minimum wage. I applaud the city for doing something bold. I’m not convinced that this raise will “lift all boats”. I have always been of the opinion (an opinion based on logic more than data), that some people at the low end of the wage scale are hurt by a minimum wage as some are helped. The most recent America magazine article articulates a healthy skepticism over this point. I have also been of the opinion that the effect of a minimum wage increase on the very wealthy is negligible, but Seattle billionaire Nick Hanauer is changing my mind on this score with the “middle out economics” he has been espousing. In my last post I commented on Mr. Hanauer’s article and how it got me considering
Hanauer’s economics also supports my long held belief that increasing minimum wage has the most notable impact (positively) on the “middle class”. As he explains it, increasing spending power of the middle class, increases spending. There is a limited amount of product and service a microscopically small minority will buy. Regardless of how wealthy the individuals are they can only wear so many pieces of art and hire so many people to prepare their taxes… and it would be self defeating if they were the only ones with the cash to buy the products their companies produce. The wealthy need a large and reasonably confident middle class to be the marketplace for their companies, if they are to grow, or even maintain their economic position.
I think that the move towards minimum wages has more positives than negatives for the poor, but at best, it is only one component of a solution. Middle out is better than trickle down, but it still isn’t bottom up. The Catholic calling is to show preference for the poor. If Jesus was clear about one thing, it was that salvation starts with the poor.