In one of the 1980 presidential debates, Ronald Reagan (in)famously asked: “Ask yourself, ‘Are you better off now than you were four years ago?’”
The answer was supposed to be “no.”
The four years of the Carter presidency is frequently remembered as being somewhat dismal: the cooling of the Cold War; revolution in Iran; and steadily rising inflation.
The demise of Led Zeppelin following the death of John Bonham prior to the 1980 election was the last straw.
But was it really that bad?
First, inflation was rising, and Reagan and Fed Chairman Paul Volcker plunged the economy into a deep recession to put an end to it.
The Cold War was near zero Kelvin and Iran was in the inchoate stages of its Islamic Revolution.
Led Zeppelin broke up.
But statistically, the late 1970s economy wasn’t that bad. GDP and non-farm employment both grew around 3.5 percent.
And more key to what I’m interested in, families were doing OK. In 1980, 43 percent of women were working. By the end of Reagan’s reign 54 percent were. The one-worker household was gone.
While family incomes were $5,000 higher in 1988, this was in part attributable to women’s participation in the work force – not because overall incomes were rising.
Which leads us to my point. The minimum wage.
Currently, the debate over the minimum wage is filling the airwaves with hyperbole, sound bites and misinformation.
As you know, the discussion is over whether the national minimum wage should be raised from $7.25 to $10.10 per hour.
The Gap announced it will pay workers a minimum wage of $9 with others, such as Wal-Mart Inc. and Sears, considering the same. Echoes of FDR’s Blue Eagle campaign?
Nor is the local price-adjusted national minimum wage consistent. Where would you rather make $10.10/hour? New York or Denver? In 2000 prices, $10.10 buys you $7.58 in Denver today but only $7.18 in New York.
Recent revelations about rental prices suggest that I’d rather make $10.10 in New York than in Williston, N.D., never thought I’d say that.
Colorado is one of 21 states with a minimum wage higher that the national one, $8 per hour.
At this wage, it will take a minimum wage worker in Denver 6.5 percent more work weeks to pay the rent.
Propaganda has begun on both sides of the aisle. And, as you might expect, the proponents of each fall along predictable lines.
Research can be found to support both sides of the argument. The supply-side explanation is a minimum wage creates a wedge between labor supply and demand – which is unemployment.
Demand-siders point to the fact higher wages lead to higher incomes and more spending – thus, employment rises.
Who is correct? “On the one hand, but on the other …”
What is relatively debate-free is how to increase income: better education. If only Congress could concentrate on this rather than debating minimum-wage minutiae.
email@example.com. Robert “Tino” Sonora is an associate professor of economics at Fort Lewis College and the director of the Office of Business and Economic Research at Fort Lewis College.