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Media Manic About Wage Increase

     The federal minimum wage went up on by 70 cents July 24, to the delight of liberal politicians and many journalists.

 

     CNN’s Ali Velshi greeted the change calling it “unmitigated good news” on “American Morning” July 24.

 

     “We’ve been underpaying minimum wage earners for too long,” Velshi continued.

 

     ABC’s Claire Shipman also called it “good news for thousands of low-paid workers,” on “Good Morning America” July 24.

 

     Jack Cafferty provided a little more cynical perspective on July 25. CNN’s “Situation Room” co-anchor said, “It’s nice they increased the minimum wage, but, I mean, this [the Democrat’s rally to celebrate] is kind of overdoing it.”

 

     The minimum wage increase, which will continue to rise 70 cents per year until 2009 when it stops at $7.25 an hour, was a high priority for the new Democratic majority that took office in 2007. Some left-wing politicians began discussing further hikes just as the July 24 increase went into effect. Sen. Edward Kennedy (D-Mass.) is leading the charge to establish a $9.50 an hour minimum wage.

 

     Democratic presidential candidates Sen. Barack Obama of Illinois and former Sen. John Edwards of North Carolina each support increases above $7.25. Sen. Hillary Clinton of New York has proposed that the minimum wage be tied to congressional pay.

 

     While some politicians and members of the media have said this is good news for America, most economists say just the opposite. Their arguments that the increase will hurt businesses and the economy and  slow job creation were left out of many reports.

 

     Media merriment over the 13.5 percent increase was to be expected since CNN, PBS, ABC, USA Today and The Washington Post all showed support for an increase when it was on the Democrats “100 hour” agenda.

 

     On January 2, Velshi declared that “it’s simply not fair that there has been a federal minimum wage of $5.15 an hour. CNN’s Andy Serwer, now running Fortune magazine, called arguments against a minimum wage hike “a lot of bull” on the June 24, 2006 “In the Money.”

 

     Of course, even the increase wasn’t enough for some people like CNN’s Lou Dobbs who suggested to CBS viewers that there is much more to be done.

 

We Make Millions, But We’ll Pretend We’re Just Like You

 

     Both CNN’s Dobbs and CBS’s Harry Smith were living the fantasy of the common man on July 24, pretending that the minimum wage increase has some affect on their lives.

 

     The increase turns out to be “just about a 10 percent raise for those folks on minimum wage, about two million of us,” said Dobbs in his commentary during “The Early Show” on CBS.

 

     But Dobbs certainly isn’t making anything close to minimum wage. According to an article on Salary.com, “CNN stars like Lou Dobbs and Wolf Blitzer make millions each year.”

 

     The article, titled “Dream Jobs: News Anchor,” interviewed CNN International anchor Jonathan Mann, who said anchoring “is probably one of the lucrative jobs in the television industry.” In addition to anchoring, Dobbs also has had sideline operations including his latest book, “The War on the Middle Class,” and a financial newsletter.

 

    In the same July 24 broadcast, “Early Show” co-anchor Harry Smith also tried to sound like an average Joe. In an interview with home and garden expert Danny Lipford Smith said, “now that the minimum wage is going up, maybe we can afford it.” Harry Smith actually earns $3 million salary according to the July 26 TV Guide.

 

    Dobbs was also wrong to say that “two million” people make the minimum wage. According to Heritage Foundation policy paper, only 1.2 million Americans earn the minimum wage or less once tips are included in the figure.

 

     Most [52 percent] of minimum-wage earners are between the ages of 16 and 24 and are working part-time before finishing their education, James Sherk and Rea S. Hederman, Jr. explained in the paper.

 

     2005 data from the Bureau of Labor Statistics put the number of minimum wage earners even lower: 479,000 hourly workers “earning exactly $5.15.”

 

“We’re Still Sorry.”

 

     Even with the July 24 wage hike to $5.85 an hour, which will increase again in the next two years to $7.25 an hour, some in the media are dissatisfied.

 

     “[W]e found out if you’re earning the federal minimum wage and you’re working full-time in this country, we’re still sorry,” said co-host Christine Romans on CNN’s “Your $$$$$ [Money]” July 28.

 

     Dobbs expressed a similar perspective on CBS’s “Early Show” July 24. In this weekly rant, he declared the increase “simply isn’t enough” and then advocated a much larger increase.

 

     Julie Chen asked Dobbs, “What do you think the minimum wage should be today?”

 

     Dobbs replied, “To adjust to purchasing power, you’re talking about nearly $10 an hour. And that’s a minimum wage to put us back to where we were 50 years ago. That’s an insult.”

 

     Many economists argue that instead of helping poor low-skilled workers, the minimum wage increase could actually hurt them. In fact, a survey of the American Economic Association found that “over 73 percent of AEA labor economists believe that a significant increase [in the minimum wage] will lead to employment losses and 68 percent think these employment losses fall disproportionately on the least skilled.”

 

     Dr. Gary Wolfram, a Hillsdale College professor and adviser to the Business & Media Institute, explained that minimum wage hikes “[raise] the cost of doing stuff where low-skilled labor is involved and increased the price of things that would require low-skilled labor – hotels, fast food.”

 

     Still, the CBS “Morning News” on July 24 shared Dobbs point of view. “[M]any labor experts say it’s not enough,” said Alexis Christoforous without quoting or naming any of those experts. She didn’t even mention economic experts who would say that the increase could mean fewer hours or even job loss. 

 

     Walter Williams, an economist and BMI adviser, has written: “if higher minimum wages could cure poverty, we could easily end worldwide poverty simply by telling poor nations to legislate higher minimum wages.”

 

     In fact, the National Center for Policy Analysis found that after minimum wage hikes in 1990 and 1992 the poverty rate actually increased from 12.8 percent to 14.5 percent.

 

Missing Pieces

 

     Economic perspective was completely missing from many of the networks’ joyful reports about the wage hike.

 

     CNN’s Ali Velshi indicated on July 24 that another perspective existed, but then glossed over it in his “Minding Your Business” segment.

 

     “There are lots of sides to this story. There is no question about that, but it’s good news,” concluded Velshi. The only nod to another perspective was when Velshi said small businesses are a little “irked” about the increase.    

 

     In contrast, the July 24 USA Today did provide an alternate perspective by quoting Marc Freedman, director of labor law policy at the U.S. Chamber of Commerce.

 

     Freedman said, “the higher federal minimum wage could mean fewer hours for employees, fewer pay increases for other employees, benefits reductions, job losses and waning job creation.”

 

     He also explained that the small businesses will have the most difficult time because of “restricted cash flow.”

     “[A]ny time you have to arbitrarily increase labor costs, they have to cover the costs in some ways … They have to pay more and get nothing out of it,” he explained.