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Jason Furman, the White House’s nominee to become chairman of the Council of Economic Advisers, made a compelling case as an analyst in 2007 for a new minimum wage of $7.25 as “a useful step to help working families escape poverty.”
Six years later, Furman and the administration are trying to persuade Congress to provide permanent increases in the minimum wage as a way to lift families not just out of poverty, but into the middle class.
It’s an important distinction that is at the center of conflicting views in Washington over the minimum wage: Republicans tend to describe the wage floor as an issue affecting young workers who want spending money or to start out at a company; Democrats say the minimum wage affects workers who are the breadwinners for families, effectively consigning them to poverty.
President Barack Obama portrayed an adjustable minimum wage as one of the “ladders to the middle class” in his fiscal 2014 budget.
Furman, a longtime White House aide, will play a key role in pitching Obama’s middle-class agenda when he succeeds Alan B. Krueger at the CEA.
Obama’s pitch mirrors efforts by both parties to broaden their appeal. But it also reflects mixed data on the effect of new wage mandates on young and unemployed workers.
Arindrajit Dube, a University of Massachusetts economist, backs a higher minimum wage but acknowledges the effect on jobs is hard to track. The nation’s 3.6 million minimum-wage workers account for 2 percent of the civilian workforce. “The academic disagreements are over no job losses or small job losses for highly impacted groups,” Dube said.
David Neumark, a University of California at Irvine economist, said minimum-wage increases deliver few benefits to poor families because many entry-level workers come from middle-class homes. “You have winners and losers,” he said. Neumark argues an expanded earned income tax credit would be a better way to help more families.
In his 2007 study for the Center on Budget and Policy Priorities, a liberal think tank, Furman said a minimum wage of $7.25 — plus tax credits and nutrition aid — would keep a family of four with a single wage earner above the federal poverty line for eight years. “The family in this example will fall back below the poverty line by 2015,” he said.
In concluding his study, Furman nudged Democrats to aim higher. “Families with incomes just above the poverty line also face real difficulties making ends meet,” Furman said.
That broader scope can be found in Obama’s new plan. He described Furman as a visionary ally in a June 10 news conference introducing him as Krueger’s successor.
“Jason never forgets who it is that we’re fighting for: middle-class families, folks who are working hard to climb their way into the middle class, the next generation,” Obama said.