Continuing his renewed effort to focus on the economy ahead of the 2014 midterms, President Obama highlighted the economic gains made since the recession and stressed the need to ensure that ordinary workers also benefit.
"It’s real, it’s steady, and it’s happening," the president said in a speech at an Indiana manufacturer on Friday, citing the strong September jobs numbers released earlier in the day.
The president reiterated his evidence that businesses are doing better: Corporate balance sheets are healthy, and profit margins have expanded—proof that his administration has helped support "pro-business, capitalist, free-market values," as he said in a separate speech Thursday. The unemployment rate fell to 5.9% in September, which is the lowest level since July 2008.
But there's a big reason why ordinary Americans aren't feeling better about the economy, Obama continued: Businesses are doing well, but workers' wages have stagnated.
“The one thing that is holding things back, the one thing that people are still concerned about, and the one thing we could change that would really … give more confidence to the economy and boost it, is if wages and incomes start going up," Obama said.
The status quo won't change unless lawmakers force it to, the president argued.
“It’s not as if companies don’t have some room to pay their workers more. They’re just not doing it," Obama said. "The reason that they aren’t giving workers a raise, is quite frankly, they don’t have to." While a tightening labor market would put some upward pressure on wages, the country needs to raise the minimum wage as well, Obama said.
Taking questions from the audience, the president swatted away concerns that a minimum wage hike would raise prices for consumers or be a strain on small businesses.
"If everyone has to raise the minimum wage, everyone adjusts," Obama said. "In some cases, because of competition, they can’t raise their profits." A few minutes later, he assured a small business owner that growing demand linked to higher wages would allow him to increase prices. "When demand is high, you can afford to charge a little bit more," he told him.
The evidence shows that a minimum wage hike would mean higher prices for food, in particular. "Most studies reviewed above found that a 10% U.S. minimum wage increase raises food prices by no more than 4% and overall prices by no more than 0.4%," wrote The Atlantic's Jordan Weissman, in a survey of the current research on the minimum wage.
Obama, along with the rest of the Democratic Party leadership, is proposing to raise the federal minimum wage from $7.25 to $10.10, which would be a 39% increase.
Though he has largely distanced himself from individual campaigns, the president's focus on wages and the uneven recovery reinforces the populist message that Democrats are trying to send to voters in the 2014 midterm elections. "Too much of the wealth is going to the very top, not enough is spread to the ordinary workers," the president said.
But the majority of voters still disapprove of the way that Obama has been handling the economy, and there's evidence that they're significantly underestimating the economic gains that have been made during his administration.