Raising the minimum wage won’t solve the problem of income inequality

Hughey Newsome Advisory Council, Project 21
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Once again, liberals demand an increase in the minimum wage.

President Obama has said raising the minimum wage is a step in addressing rising income inequality, something he called “the defining challenge of our time.” Additionally, per the Washington Post, he has given his support to the Harkin-Miller proposal put forward by congressional Democrats. This plan, introduced earlier this year by Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) would raise the minimum wage to $10.10 and peg it to inflation, more than a dollar higher than the $9 proposal the president made in his State of the Union address in February.

The proposals at the federal level would be a required minimum, but states could choose to have their own higher minimums. The state of New Jersey recently raised its minimum wage to $8.25 per hour and the California legislature recently approved an increase to $10 an hour.

Data on income inequality does not lie, but when the goal is to make an oversimplified argument about the rich getting richer and the poor not catching up, some significant nuance is missing.

The top quintile of wage earners is not a monolith. Consider the riches to rags stories of rapper M.C. Hammer, football star Ryan Leaf and businessman John DeLorean. Success and wealth can be a chutes-and-ladders affair.

One-percenters already contribute a disproportionate amount to annual tax revenue. They are also likely subject to income taxes in addition to double taxation through capital gains taxes and dividend taxes (both increased by Obama’s Affordable Care Act).

These facts, however, are usually missing from the left’s income inequality talking points.

Inconvenient truths notwithstanding, there is definitely a divergence in earnings between the haves and the have-nots. The left wants to fix this with a top-down approach, forcing higher wages for low-income wage earners rather than addressing what’s driving the divergence in the first place.

Ironically, Obama highlighted one critical driver just after taking office.

In his February 2009 address to Congress, Obama stated, “In a global economy where the most valuable skill you can sell is your knowledge, a good education is no longer just a pathway to opportunity — it is a pre-requisite.” He was absolutely correct. Globalization and technology changed the requirements for advancement in America. Oft-quoted studies show income inequality increasing since the 1970s, and the U.S. Census Bureau reports American has not had a trade surplus since 1975.

Consuming more than we produce, Americans have less actual wealth to enjoy here at home. The rich can adapt as they have more resources to invest in growth abroad. But the rest of American wage earners need to adapt, as Obama suggested, by offering more skills and knowledge in the 21st century marketplace.

The mainstream media generally fails to connect income inequality to the inability of our nation to prepare qualified workers for high-skill, high-paying jobs. So politicians fill the vacuum, demagoguing the successful and affluent.

The New York Times asked, in a 2012 article, “How can so many jobs remain unfilled with unemployment so high?”  “One explanation,” the article concluded, “is that many would-be workers lack the necessary skills to fill those positions.”

That’s why Obama demands both skills training to succeed and a bump for those willing to stay in place. It rewards treading water, even though one is not supposed to make a career out working for the minimum wage.

It is somewhat fitting that the same week Obama spoke about “the defining challenge of our times,” test scores released by the Organization for Economic Cooperation and Development (OECD) showed 15-year-old American students lag behind many foreign competitors in reading, science and math.

Obama administration programs such as Race to the Top, as well as the president’s inattentiveness to programs that could actually help improve the nation’s educational system, help drive the inequality his supporters detest. Neither Obama nor his boosters seem willing to admit his faults and address the true problem.

Then again, why do the hard things to fix society’s problems? It’s easier to sell society on the idea that paying fast-food workers a few extra dollars an hour will fix our nation’s income inequality problems.

Shame on society for buying the lie.