The Hinge is 1975

If you missed Obama's State of the Union address last night, as I did, today's lede unsigned editorial in the New York Times provides a synopsis. One proposal, to increase the the federal minimum wage to $9 an hour from $7.25 and to index it to inflation, is the subject of Annie Lowrey's story today:

Many state and local government set their own minimum wages above the federal floor. Currently Washington is the only state that sets a minimum wage above $9 an hour, but several states exceed the current rate of $7.25.

The White House said that the $1.75 increase in the minimum wage would be enough to offset roughly 10 to 20 percent of the increase in income inequality since 1980. According to data compiled by the economists Thomas Piketty, at the Paris School of Economics, and Emmanuel Saez, at the University of California, Berkeley, inequality has worsened considerably during that time, and many metrics show that wages have stagnated or declined for millions of working families. The income share of the top 1 percent of earners has doubled, to 20 percent in 2011 from 10 percent in 1980. Between 1980 and 2008, according to analysis by the Economic Policy Institute, the top 10 percent of earners captured 98 percent of all income gains. 

The proposal is one of several that the White House has put forward to tackle that inequality. In the speech, Mr. Obama also proposed expanding early childhood education programs — another path that experts say can tackle inequality by leveling the playing field and increasing mobility among children from low-income families. “Every dollar we invest in high-quality early education can save more than $7 later on by boosting graduation rates, reducing teen pregnancy, even reducing violent crime,” Mr. Obama said. “Let’s do what works, and make sure none of our children start the race of life already behind. Let’s give our kids that chance.” 

In his 2008 campaign, Mr. Obama proposed lifting the minimum wage yet higher, to $9.50. Under the current proposal, the White House said that a family earning $20,000 to $30,000 would see an additional $3,500 of income a year. 

“This single step would raise the incomes of millions of working families,” said Mr. Obama on Tuesday night. “It could mean the difference between groceries or the food bank, rent or eviction, scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while C.E.O. pay has never been higher.”

Anytime the research of Piketty and Saez finds its way into the mainstream press it's a good day. Piketty and Saez have captured the Zeitgeist -- the "unprecedented surge in top wage incomes starting in the 1970s and accelerating in the 1990s." The 1%. I track it to 1975; that's the hinge. The critical presidential administration is Gerald Ford's, although Carter's has to be included in the mix. By the time Reagan assumes power the flight path of the Zeitgeist has already been established.

There are currently ten states that peg their minimum wage to cost-of-living increases. Washington State has the highest minimum wage because we established our inflation peg (by means of a ballot initiative for which I helped gather signatures) sooner than others. Seemingly each legislative session in Olympia the restaurant lobby tries to repeal it.