Safety Net: Spider’s Web or Trampoline?


You have to love the Newt. Intellectually, he is often all over the place but occasionally comes up with a gem of a metaphor that perfectly captures political and ideological differences. While Romney is likely to receive the nomination (unless it’s contested at the convention), he often stumbles blindly through the simplest concepts. His gaffe that he doesn’t “worry about the poor because they have a safety net” was compounded by his next idea to “index the minimum wage to inflation.” (I guess that means we’re getting more inflation?)

Anybody who thinks critically about the economics of the minimum wage understands that it was never meant to support an above-poverty-level standard of living for a family of four. The minimum wage is supposed to protect teenagers and first job hunters from being overly exploited for their lack of skills in the labor market. They can acquire these basic skills best with a job – it’s the first rung up the ladder of wage progression. If we try to advance minimum wages farther up the ladder to lift people out of poverty, fewer people will catch that first step and end up among the structurally long-term unemployed. To be honest, most people earning a minimum wage cannot afford to raise a family; first they must acquire skills and productivity to command a higher wage in an expanding labor market. To expect otherwise is not compassionate, it’s foolish.

Gingrich illustrates this clearly with his spider’s web vs. trampoline metaphor. We need a safety net for bad luck, but our policies should be designed to help people bounce themselves up the ladder to self-sufficiency. We need political leaders who can make this clear.

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