Washington Post business columnist Steven Pearlstein takes the business lobby, and new Senate Finance Committee Chair Max Baucus, to task today, setting the record straight about a minimum wage hike’s impact on jobs.
…both economic theory and history suggest that small business will, in time, pass on its increased costs to its consumers … [It] will have a minimal impact on adult employment … But largely offsetting those effects will be the increased demand for goods and services by tens of millions of Americans who will finally be getting a raise. A higher minimum wage doesn’t lower economic activity so much as rearrange it slightly.
He also notes the “specious” arguments for more business tax breaks:
During the last decade, when inflation-adjusted pay of minimum-wage workers was declining, tax rates for small businesses were also declining, thanks largely to the Bush cuts. If it is now imperative to reduce business taxes when the pay of minimum-wage workers is rising, you have to wonder if there will ever be a time when the small-business lobby thinks it doesn’t deserve a tax cut.
Pearlstein also flags Sen. Baucus as a potential obstacle to a pay raise free of special interest favors, as he is holding a hearing today on “how to offset the ‘economic hardship’ caused by the higher minimum wage with yet another round of business tax breaks.”
Sounds like Sen. Baucus needs to hear from his constituents.
UPDATE: It’s not just Baucus.