The Chattering Class has focused much of their post-election commentary on the political implications of the Democrats’ Congressional takeover. Policy discussions have understandably focused on our presence in Iraq. Domestic policy, however, has received little attention. While the war certainly played a starring role in driving the mid-term results, domestic economic issues were by no means unimportant. According to a Democracy Corps post-election analysis, 75% put “changing our economic policies so middle class families can prosper again” in their top-three most important issues when voting or considering voting for a Democratic candidate in this month’s elections. “Getting us out of the mess in Iraq” had the same score, suggesting that many voters view the nation’s domestic economic woes as a problem on par with the entanglement in Iraq.

The first domestic social policy on the Democrats’ 100 Hours Agenda is a hike in the minimum wage, from its current $5.15 an hour to $7.25 an hour. Democrats are right to put the minimum wage at the top of their list, but not for the reasons many advocates and supporters believe. While policy makers and advocates for low-wage workers argue that the hike in the minimum wage will improve the lives of workers – nearly 15 million, according to Speaker-Elect Pelosi – the economic impact will likely be modest. The pay-off to successful passage of a minimum wage increase is a political prize, not an economic one. In other words, the economic impact of a federal minimum wage increase is likely to be minor compared to the popular good-will Democrats are likely to inspire.

Consider the political support for the minimum wage hike. According to a recent report from the Pew Research Center, the American public overwhelmingly favors raising the minimum wage to at least $7.15 an hour. 83% agree with the increase, while nearly 50% say they strongly support such an increase (only 14% are not in favor of an increase). While support varies across political and socioeconomic lines (with Republicans and high-income respondents least likely to support a wage hike) – raising the minimum wage receives strong support across the board. Indeed, 72% of Republicans and 87% of independents favor the policy.

In addition to popular support, the minimum wage shows promise as an illustrative case of bi-partisan cooperation between the legislative and executive branches. President Bush has signaled a willingness to work with Congress on passing a wage hike. The passage of a wage increase would build political good-will for both the President and Congress alike, providing a high-profile example of the potential for bi-partisan policy accomplishments.

Despite the political benefits of a minimum wage hike, the economic consequences are likely to be minor. Advocates such as the Economic Policy Institute have made dramatic claims for the impacts of an increase in the federal wage, suggesting that 5.6 million workers would directly benefit from the increase. 61% of those affected would be women, 25% would be parents, 71% would be age 20 or older, and 43% would be full-time workers. But these estimates ignore a heated dispute amongst economists regarding the “employment effects” of a minimum wage increase. That is, will a higher price for labor result in fewer job opportunities, as firms contract to deal with the added expense?

The academic debate over employment effects is summarized in a recent National Bureau of Economic Research paper. While some economists have produced studies showing decreases in employment following minimum wage increases, other economists’ research shows just the opposite. The dispute between the two sides has remained heated for nearly a decade. It hinges largely on methodological technicalities, and has focused almost exclusively on teen workers, despite the substantial number of adult workers working in minimum wage jobs. Moverover, no research to date has effectively modeled the impact of a minimum wage increase on employment while carefully accounting for other factors influencing the low-wage labor market, such as the monetary incentives of the Earned Income Tax Credit. Despite the murkiness, 650 economists have signed a petition in support of a minimum wage increase. A careful read of the minimum wage research suggests that the employment effects of a minimum wage increase are decidedly unclear, despite economists’ valiant efforts. What is clear, however, is that advocates’ dramatic claims are likely over-simplified.

Perhaps more importantly, the stagnant federal minimum wage has spurred states and cities to act locally in order to boost low-wage worker compensation. Indeed, voters in six states passed referenda that boosted their state minimum wages and indexed the wage to inflation, a step that Congress has yet to propose. All six of these states – Arizona, Colorado, Montana, Nevada and Ohio – supported Bush in 2004. And business-friendly Forbes magazine notes that “Pelosi's push [for a federal minimum wage increase] wouldn't help any of her own constituents. That's because on Jan. 1, California's minimum wage will rise to $7.50, and San Francisco's to $9.14. … But better $9.14 an hour in high-income, high-cost San Francisco than in Biloxi.” While the federal minimum wage raise would indeed impact a substantial percentage of workers, particularly in the Deep South (assuming, perhaps incorrectly, no negative impact of wage increases on employment), its overall economic impact is likely to be a ripple rather than a tidal wave.

None of this is to say that Congress should abandon its push for an increase in the minimum wage. The Clintonian policy mantra that “people who work should not be poor” was a winner, both from a political and a moral perspective. Low-wage workers are undoubtedly under-compensated. With the minimum wage at its lowest level (in real dollars) since 1968, a worker toiling forty-hours a week for fifty two days a year earns only $10,700, and is unlikely to have health benefits, savings, or a retirement plan, according to the Brennan Center for Justice. Moreover, many minimum-wage workers who would like to work full-time instead work part-time because full-time positions are not available. If the minimum wage had risen at the same rate as CEO pay since 1990 (315%), the lowest paid worker in the United States would be earning $23.03 an hour today, rather than $5.15. And, according to the Congressional Research Service, Congress has increased their own effective hourly pay by about $15 an hour in the last nine years thanks to built-in cost-of-living congressional pay increases in the federal budget.

The time has come for Congress to show the same respect to America’s working poor by bumping up the minimum wage. No matter that its economic impacts are unclear. The legislation would signal to working American families that Democrats are going to make good on their promise of attending to their needs. But given the minimal economic impacts likely from the policy, a minimum wage hike must be the beginning, not the end, of Democrats’ efforts to re-weave the fabric of America’s safety net.

Cross-posted at Foresight.