Sen. Ron Johnson (R-Wisconsin) has suggested that he believes the federal minimum wage should be eliminated, and that the “marketplace” should be in charge of setting wages instead — a move that would send U.S. wage policy back to pre-World War II, when the federal minimum wage was first created.
In a debate with Democratic U.S. Senate candidate and Lieutenant Governor Mandela Barnes on Friday, Johnson claimed that raising the minimum wage would eliminate jobs — which economists have said is not true — and misleadingly compared the policy to “price fixing,” an anticompetitive practice typically done by corporations in coordination to raise prices of goods.
“I really don’t like the federal government getting involved in doing price fixing in anything and that includes wages,” he said.
He went on to claim that eliminating the minimum wage would create more competition and potentially higher wages, a statement that is patently false.
“If you have a strong economy which we had under the previous administration you had plenty of jobs and you had rising wages. I think something like $2,000 to $4,000 a year is what the average family increased their wage by,” he said. “So, that’s the best thing is have the marketplace take care of it rather than government set a minimum wage that then starts eliminating jobs.”
Johnson’s statements were misleading or false on numerous counts.
Eliminating the minimum wage — which was created in 1938 to protect workers and stabilize the economy — would allow corporations to pay workers extremely low wages. Corporations would almost certainly take advantage of this lack of regulation to disastrous effect for workers across the country. Even though the current federal minimum wage of $7.25 is not considered a competitive wage by any means in today’s job market, there are still hundreds of thousands of workers who are making such a wage, which is well under a living wage in every state in the U.S.
Notably, one in seven gig workers, or people working for companies like Uber and DoorDash, are making less than the federal minimum wage, the Economic Policy Institute found earlier this year. Corporations are allowed to exploit the fact that such workers aren’t classified as employees in order to not guarantee a minimum wage or provide benefits. The fact that these jobs exist and are still staffed is evidence that Johnson’s bad faith claim that wages would rise if there were fewer wage regulations is blatantly untrue.
Corporations may threaten to eliminate jobs as a political tactic if they are forced to wage raises, but economists resoundingly say that raising the minimum wage does not eliminate jobs in itself. Real world examples also show the same thing. In California, for instance, the minimum wage for businesses with more than 25 employees increased to $15 an hour this year. At the same time, the state has been posting some of the strongest job growth numbers in the wake of the pandemic job downturn of 2020.
And, while wages did grow under President Donald Trump, as Johnson said, their rate of growth was slower than it typically is; a 2020 study found that, in Wisconsin, wages only rose 6 percent during Trump’s first three years in office, compared to a 7.1 percent raise during President Barack Obama’s first three years in office. When inflation is taken into account, wages have remained stagnant for decades, while CEO pay has grown by nearly 1,500 percent since the late 1970s.
Barnes slammed Johnson for his attack on the minimum wage. “Ron Johnson — a multimillionaire who literally complained about only doubling his wealth as our Senator — said last night there should be NO federal limit on how low your wages can go,” Barnes wrote on Twitter on Saturday.
The federal minimum wage hasn’t been raised in 13 years. Accounting for inflation, the current $7.25 rate is the equivalent of $5.27 in July of 2009, when the rate was set — even lower than the rate of $6.55, which was the minimum wage before 2009. In sharp contrast to Johnson, Barnes says he supports raising the federal minimum wage to $15, a threshold that labor advocates have long called for.