Jim Dey: The truth can hurt, politically speaking

Jim Dey: The truth can hurt, politically speaking

Rauner catching heat for minimum-wage comments, including a comparison to the greedy Mr. Burns

When political optics and economic theory collide, there's no doubt which will come out on top.

That's why Republican gubernatorial candidate Bruce Rauner beat a hasty retreat last week after he was quoted as saying that Illinois' $8.25-an-hour minimum wage — $1 higher than the national minimum wage of $7.25 — puts state residents at a competitive disadvantage in securing employment and should be reduced.

"I made a mistake. I was flippant, and I was quick. I should have said, 'Tie the Illinois minimum wage to the national minimum wage and, in that context, with other changes in being pro-business, I support raising the national minimum wage," said Rauner, a self-made billionaire businessman from Chicago.

Unfortunately, it's what candidates sometimes say, rather than what they should have said, that can run their campaigns into a ditch. Rauner's rivals were quick to pounce.

"All four Republicans oppose my plan to raise the minimum wage to at least $10 an hour in Illinois. One of them — a billionaire at that — even announced his proposal to slash the minimum wage by $1 an hour, taking $2,000 a year out of the pockets of those earning the least, which is cruel, heartless and wrong. These guys have all the compassion of C. Montgomery Burns," said Democratic Gov. Pat Quinn, referring to the cold-hearted cartoon tycoon in "The Simpsons."

One of Rauner's Republican opponents, state Sen. Kirk Dillard, reacted to Rauner's initial words by suggesting he had just committed "political suicide."

Chicago teachers' union leader Karen Lewis said Rauner is "insane." Even local Democratic state Sen. Mike Frerichs, who is running for state treasurer, jumped on the bandwagon by attacking Rauner and linking him to his likely Republican opponent, state Rep. Tom Cross.

Frerichs suggested Rauner "took his cues from Tom Cross" and said both are "clueless candidates who denigrate low-income workers and stack the deck against working families just trying to get ahead."

As a successful entrepreneur, Rauner is used to saying what he thinks, and he's candidly declared war on the state's corrupt governmental status quo.

But by ignoring the political appeal of the minimum-wage issue, Rauner clearly erred.

The trap is that candidates who oppose increasing the minimum wage can be easily caricatured as cold and heartless. Those who support forcing private businesses to pay higher wages come across as compassionate, even though they're spending other people's money.

Here's the Rauner quote that he quickly repudiated.

"I will advocate moving the Illinois minimum wage back to the national minimum wage. I think we've got to be competitive here in Illinois. It's critical we're competitive. We're hurting our economy by having the (Illinois) minimum wage above the national. We've got to move back to the national."

Is that really "insane" or — shudder the thought — C. Montgomery Burns-ish?

University of Illinois economics Professor Fred Giertz doesn't think so.

"That's not a bad economic argument. But it's not a good political argument," Giertz said, noting that minimum-wage hikes are popular with voters.

"Most economists think the minimum wage is counterproductive," he said, although it's "not too much of a problem" in Illinois if it's "not too far above the equilibrium wage," meaning the national rate.

But what's the problem with requiring workers to be paid more?

Economic rules decree that the higher the cost, the lower the demand — meaning fewer employers offering fewer jobs.

"It's pretty clear that raising the minimum wage ought to reduce employment levels," said UI finance Professor Jeffrey Brown.

Brown cautioned that "overall we don't have a completely clear picture at the national level" of the impact of increases to the minimum wage." He said there is a "raging debate" among economists "over what the effect is and how big it is."

"The people who still have a job are better off. But there also will be individuals who find it more difficult to get a job," said Brown, including those "with the most tenuous grasp on the job market to begin with."

"It can really have a long-term effect on them," Brown said.

There are other arguments against a higher minimum wage. A substantial number of minimum-wage earners are young and have little experience in the job market and few responsibilities outside it. Think of the average teen who works at McDonald's.

Further, increased labor costs drive business owners to find ways to do more with less, including embracing technology that reduces the need for workers.

Consider the unemployment problem in Illinois. According to the Illinois Department of Employment Security, the average 2012 unemployment rate of individuals ages 16-19 was 27.1 percent. The average unemployment rates in that age group for whites, blacks and Hispanics was 26.3 percent, 29 percent and 31.5 percent, respectively.

The average 2012 unemployment rate for people of all ages was 8.7 percent overall. Broken down by racial categories, it was 7.7 percent for whites, 16 percent for blacks, 10.2 for Hispanics and 5 percent for Asians.

Given those alarming numbers, how can a higher minimum wage help workers, particularly less-educated, lower-skilled minorities who already are at a disadvantage?

There are two solutions to the unemployment problem.

One is increased education and better job skills.

"Educational attainment is the best indicator of employability," said Greg Rivara, a spokesman for the state's employment security department.

The other is to build a booming economy that creates the demand for labor that drives wages higher. Instead of too many people seeking too few jobs, Illinois needs more employers competing with each other for employees.

Illinois definitely needs to make itself more attractive to job creators, and Rauner was correct to cite the linkage between economic growth and the minimum wage. Nonetheless, that will do him little good during the coming months when he's repeatedly cast as just another heartless plutocrat.

Jim Dey, a member of The News-Gazette staff, can be reached by email at jdey@news-gazette.com or at 351-5369.

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Sid Saltfork wrote on January 17, 2014 at 11:01 am

Rauner grew up in a upper middle class family.  Dad was a Motorola exec, and mom was a nurse.  He attended Ivy League schools.  He made his money managing pension systems which included the Illinois pension systems.  He is on the political civic groups boards in Chicago which pushes for big business breaks over people.  He has no knowledge of what middle class, working poor, or poor people face economically.  Wonder why a man who made over $50 million a year wants to be governor?  He said what he thinks.  There was no miscommunication.  He is "heartless" when it comes to more money in his pocket.

What a choice between all of the candidates...... career politicians, and millionaires.  Mr. Fuddles is corrupt, and inept along with the other career politicians running for the office; and Rauner is hypocritical, and heartless toward all that are not rich.  That is the best that Illinois voters have to choose from?  Illinois needs to revert back to territorial status with no legislature, or governor for a couple of years so it can stabilize away from corruption, and greed.