In recent weeks, President Obama has made a $10.10 minimum wage the centerpiece of his economic agenda. But early last year, White House strategists rejected a figure so high, worried that it could destroy jobs and anger the business community just as the regulation-heavy Affordable Care Act was about to take effect.
“We wanted to ensure it was a moderate increase in the minimum wage so we didn’t spark any negative effects on employment,” explained Seth Harris, who was acting labor secretary at the time and participated in the discussions. “The challenge to balance is raising wages enough that you’re going to lift families out of poverty ... but not raise the wage so high that there’s a risk of meaningful employment effects.”
The decision disappointed advocates for the working poor, as well as congressional Democrats, who were already pushing to set the $7.25 wage closer to $10 an hour. Over the past year, Obama reconsidered, casting off initial concerns in favor of unifying his party ahead of this fall’s midterm elections.
The shift to $10.10 has drawn fire from Republicans, who accuse Obama of playing politics with people’s jobs. But administration officials have defended the position, saying the higher wage is appropriate for a strengthening economy that is leaving too many people behind.
“It would immediately raise millions of people out of poverty. It would help millions more work their way out of poverty,” Obama said this week before a rally of 3,000 people just outside of Hartford, Conn. “And it doesn’t require new taxes, doesn’t require new spending, doesn’t require some vast bureaucracy.”
The emphasis Obama is now putting on the minimum wage — beginning with this year’s State of the Union address — contrasts sharply with the administration’s early caution.
Last month, White House officials dismissed a finding by the nonpartisan Congressional Budget Office that the policy would raise wages for millions of people but cost the nation 500,000 jobs by 2016.
The newly reinvigorated White House Office of Political Affairs, meanwhile, is coordinating with congressional leaders, candidates for federal office, outside groups and backers of state referenda, urging them to talk about the minimum wage and make clear to voters where the opposition stands.
“The minimum wage crystallizes in a very stark way the contrast between Democrats in Congress and Republicans in terms of how best to address the economic concerns of the American people,” said a senior White House official speaking on the condition of anonymity.
Republicans insist they are on the right side of the economic evidence in arguing against a minimum wage hike. But Obama is on the right side of popular opinion: Polls show that roughly two-thirds of those surveyed support raising the minimum wage, even in traditionally conservative states such as Virginia.
Though Obama campaigned in 2008 to raise the minimum wage to $9.50 by 2011, the issue moved to the backburner during his first term, when economists were focused on responding to the recession and avoiding economic catastrophe. After Obama’s reelection in 2012, with the economy showing signs of recovery, the White House turned back to the issue. Though the unemployment rate had come down, wages were flat, and the administration was looking for solutions.
“As the economy has continued to heal from the Great Recession, the economic focus is appropriately turning toward the longer-run structural challenges of which expanding wages is among the most important,” said Jason Furman, the chairman of Obama’s Council of Economic Advisers.
Obama’s economic and political advisers began quietly considering the minimum wage as a major part of his second-term agenda. A debate quickly unfolded, often around a table in the office of the new White House chief of staff, Denis McDonough.
Some advisers discussed whether to reprise the $9.50 target Obama had set in 2008. Or, even better, adopt the inflation-adjusted $9.80 target that was gaining favor among congressional Democrats. But those figures quickly encountered resistance, according to former administration officials. Though all the advisers supported a higher minimum wage, several administration economists argued for a lower target, noting that the economy was still weak and the unemployment rate, at 7.9 percent, was still high. White House political strategists agreed, saying an excessively high minimum wage could worsen relations with business just as companies were being asked to implement the Affordable Care Act.
In the end, the advisers recommended $9 an hour, a figure they hoped could attract bipartisan support on Capitol Hill. They recommended raising the wage over two years, starting in 2014, and setting it to rise automatically with inflation.
Obama formally unveiled the proposal in the 2013 State of the Union address. Afterward, Harris, the acting labor secretary, began touring the country.
“One mom told me she only had enough money for her and her daughter to have one hamburger and one package of French fries, so the mom ate the bread and gave her daughter the burger and the fries,” said Harris, now a scholar at Cornell. “Those are choices that working people should not have to make.”
Still, the proposal did not gain momentum in Congress. Minimum wage activists and some influential Democrats considered it too stingy. On several occasions, White House officials hosted angry lawmakers and activists who came in to complain.
Then Sen. Tom Harkin (D-Iowa) and Rep. George Miller (D-Calif.) raised the bar again, unveiling a bill to lift the minimum wage up to $10.10 an hour. That pushed some conservative Democrats toward the White House position, creating an intraparty rift.
Judith Conti, federal advocacy coordinator for the National Employment Law Project, said she was delighted that the president reintroduced the idea of raising the minimum wage, but disappointed by his cautious target.
“We never got a clear satisfactory explanation for why,” she said. “We really needed to pick the most aggressive figure we thought the politics could bear in order to put upward pressure on wages.”
Over the past year, the White House decided the $9 target was untenable, especially in an improving economy that was leaving many Americans behind. Late last year, the White House formally climbed aboard the $10.10 trai, and launched an all-out campaign to hit Republicans with the issue in the run-up to the mid-terms.
“There was broad agreement the minimum wage should be raised, and there was broad agreement there was little or no disemployment effect,” Furman said. “Our biggest point was that $7.25 was too low, and we were not debating the numbers.”
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