Is there a minimum wage deal in the works?

Senator Harry Reid is signalling that he may be open to a compromise minimum wage increase bill that would include something less than the $10.10 an hour proposed by the White House and include some tax incentives for small businesses to hire new workers.

The Hill:

A senior Democratic leadership aide said Reid is a “hardcore” supporter of Obama’s target number, to be achieved over three years, a proposal strongly supported by labor unions, which are powerful in the majority leader’s state.

But several Democratic senators have signaled they are willing to negotiate a lower wage floor that would be easier to get enough Senate votes to pass.

Now, despite his staunch personal preference for $10.10, Reid’s office doesn’t rule out compromise depending on feeling within his caucus.

“Sen. Collins is talking with colleagues on both sides of the aisle about a possible alternative that could raise the wage by a reasonable amount and avoid the loss of the 500,000 jobs that the nonpartisan Congressional Budget Office estimates could result from raising the minimum wage too quickly and by too large an amount,” said Kevin Kelley, a spokesman for Collins.

Kelley said the package could include tax incentives to encourage small businesses to hire workers. Collins, a centrist, is up for reelection this year.

Sen. Angus King (Maine), an independent who caucuses with Democrats, said he would vote for the measure to raise the minimum wage to $10.10 an hour but declared he would not be satisfied with a vote merely for show; he wants legislation that could pass.

“My only real concern is that we come out of here with something,” he said.

Sen. Mark Warner (D-Va.), a GOP target this year, also indicated a willingness to do a deal.

Even if senators agree and pass a bipartisan package, the GOP-led House is unlikely to follow suit. With Republicans well placed to win the Senate, some Democrats see a wage hike vote as a useful weapon on the campaign trail. A compromise deal could let GOP senators and candidates off the hook. But a deal could also shield centrist Democrats from GOP and industry attacks.

The American Action Forum released a study on the effects on jobs and the economy of a minimum wage hike:

While policymakers continue to debate the merits of increasing the federal minimum wage, it is important to understand the labor market implications of such a policy. Unfortunately, these very effects are controversial. To what extent will a rise in the minimum wage hurt overall hiring and employment? Would any effects be concentrated on low-skill workers and sectors?

The variety amongst state minimum wages provides a natural experiment from which to learn. Nineteen states enforced minimum wages above the federal minimum of $7.25 per hour and thirty-one had minimum wages equal to $7.25 in 2013.[1] This paper uses recent data to analyze the impact of raising the minimum wage on employment among the 50 states. As shown in the following charts, the analysis finds that in 2013, a $1 increase in the minimum wage was associated with a 1.48 percentage point increase in the unemployment rate, a 0.18 percentage point decrease in the net job growth rate, a 4.67 percentage point increase in the teenage unemployment rate, and a 4.01 percentage point decrease in the teenage net job growth rate. Consequently, high state minimum wages increased unemployment by 747,700 workers and reduced job growth by 83,300 jobs.

Even a nominal hike in the minimum wage would be a drag on job growth and the economy. And I don't know how many small businesses would go for a small tax break to hire a worker who isn't worth $10.10 an hour.

Yes, labor has value. But that value cannot be determined arbitrarily. These efforts to do so only price young, inexperienced people out of the job market and set them on the road to failed lives. Time for Harry Reid and Susan Collins to give up on this idea and get to the business of tax and regulatory reform - two ideas that will create jobs the right way.

If you experience technical problems, please write to