The minimum wage is a disgrace, and raising it would be a boon to the whole economy
13 min read
More than 100 million Americans live on less than a minimal family budget
Sometimes, it’s useful to state the obvious. Here’s a fact, for example, that we all know to be true: America’s economy is enormous. It’s worth saying that out loud and repeating it to ourselves and others, because today’s Powers That Be (economic, political, and media) are wrongly forcing a regime of austerity on our nation. They’re insisting that we hoi polloi must downsize our middle-class dreams, claiming that America no longer has the wherewithal to do big things.
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Their narrow and pessimistic prescription for our future is not only at odds with the American spirit, but also at odds with the facts. The wealth of this nation is naturally huge and expansive–thanks to such fundamentals as the sheer size and diversity of our land, the breadth and depth of our natural resources, and especially the can-do attitude of our enterprising and hardworking people. Far from shrinking down, we have the economic strength today to be spreading the middle class and advancing the historic, egalitarian ideals that were planted at America’s founding.
In natural terms, our economy is a giant sequoia. Unfortunately, our present corporate and governmental leadership can’t seem to grasp one of the basic laws of nature: You can’t keep a mighty tree alive (much less have it thrive) by only spritzing the fine leaves at the tippy-top. The fate of the whole tree depends on nurturing the grassroots.
If you cut wages, you cut the number of your own customers. If an employer does not share prosperity with those who make him prosperous, then pretty soon there will be no prosperity to share. We like to have plenty of customers. —-Henry Ford, explaining why he more than doubled wages in the midst of 1914’s deep recession.
Sadly, in this time of such potential for greatness, we’re led by a myopic crew of leaf spritzers. In Washington, on Wall Street, and in the corporate suites, the elites have taken exquisite care of themselves, with the top one percent tripling their share of the nation’s wealth since 1980. How did they obtain this phenomenal boost? By siphoning up shares of America’s wealth that had been going to the rest of us. Blithely oblivious to the dangerous shriveling of the grassroots, they’ve increased their take by offshoring our middle-class jobs, slashing American wages and benefits in practically every sector, busting the ability of unions to fight back, deregulating their nefarious corporate and financial operations, dodging their tax obligations, privatizing and gutting public services (from schools to food stamps), and turning our elections into auctions run by and for billionaires.
This massive redistribution of wealth is not an issue of economics, but of basic morality. In plain words, it’s robbery–not only robbing workaday Americans of both their share and their dreams, but also mugging America itself of its unifying ethos. Fair and just behavior–especially by the powerful–are requisites for holding so many millions of us together as a free society.
The importance of this founding ethic has been instilled in us by the phrases, stories, and symbols of our culture: The golden rule (Bible), the general welfare (Constitution), the common good (kindergarten), the social contract (New Deal), the land of opportunity (ubiquitous slogan), E pluribus unum (coins, the dollar bill, and the Great Seal), “one nation… with liberty and justice for all” (Pledge of Allegiance).
These and others reiterate and confirm our ethical pledge of trust in each other, our commitment to the notion that we’re all in this together. That’s the moral glue that defines and binds us as Americans. But each one is now being openly mocked–cast aside by the rich and powerful as irrelevant to how our economy ought to work… and for whom.
The bare minimum
In this country of unsurpassed wealth, it’s an abomination that the power elites are casually tolerating poverty pay as our wage floor. How deplorable that they can actually juxtapose the words “working” and “poor” without blinking, much less blushing… or barfing! Nearly four million Americans are being paid at or below the desiccated federal minimum wage of $7.25 an hour. For a single mother with two kids, that’s $4,000 a year beneath the poverty level. Upwards of 20 million additional Americans are laboring for just a dollar or so above the minimum–still a sub-poverty wage. Where are the ethics in a “work ethic” that rewards so many with paychecks that deliberately hold them in poverty?
Today’s minimum was passed in 2007, and the meager purchasing value it had even then has since been devoured by inflation. Consider the kind of life $7.25 buys. At that rate a full-time worker is taking in only $1,250 a month, before payroll taxes. In most places–even if you’re single with no children–try stretching that over the basics of rent, utilities, groceries, and gas. Need car repair? Lose your job? What if you get sick? Good luck.
To hide the ugliness, corporate politicos and front groups have draped a thick tapestry of myths, lies, and excuses over the miserly wage. “The only people paid the minimum,” goes one of their oldest dodges, “are teenagers working part-time summer jobs for extra cash.” Not exactly–in fact, only 6.4 percent of these low-wage employees are teen part-timers. Contrary to the stereotype, the typical minimum-wage worker is an adult, white woman (including many single moms) whose family relies on her paycheck.
Why Congress is so popular
Demonstrating the depth of his insight into the problems of low-wage workers, GOP Rep. Bill Young of Florida recently “discussed” the issue with a voter in St. Petersburg. … [read more]
In the last couple of years, the hard-puffing right-wing-osphere has conjured up a new, especially nasty canard to explain away such low pay. Buckle-up for this one: “In America, the poor are rich.” Yes, scoff these revisionists, it’s not uncommon for poverty-wage families in the US to have an air conditioner. Imagine that! They might also possess kitchen stoves, working TVs, and sometimes even cell phones. Why, poor scavengers in Third World nations couldn’t even imagine such luxuries. Plus, notice that a lot of our so-called “victims” of poverty are fat, so it’s not like they’re starving. If you’re not starving, you see, you’re not really poor. Thus, they conclude with a smirk, those on minimum wage should count their blessings and shut up.
Besides, they add, if you are struggling to make ends meet on $1,250 a month, it’s your fault. The latest fashion among far-right apologists for America’s widening income gap is to scold the poor for their poverty. Among the leading voices for this socio-psycho-pop nonsense is radio ranter and multimillionaire Michael Medved. In a commentary last year, he both asserted the moral superiority of his fellow one-percenters and pounded the poor as victims of nothing but their own worthlessness. The rich, he informed us, are “strivers” whose behavior should be emulated. To reprimand them as greedy, he instructed, is “wrong as a matter of principle,” for they have “created wealth and built beautiful lives for their families.” So, he concluded, “gratitude is due.”
Then, as if admonishing children, Medved turned to those at the low end of the income pyramid: “Poor people, on the other hand, need to change.” Snootily referring to them as “the underclass,” he piously opined that to better themselves, the group “needs to learn middle-class habits.” Apparently no one has advised him that millions of today’s poor–those who are paid minimum wage and those who can’t find jobs at any wage–were thoroughly middle-class until Medved’s beloved one percent crashed our economy and knocked them into poverty. It’s not better habits they need, Michael, it’s jobs with better pay.
No can do
Raise the minimum wage? “Holy Ayn Rand!” cry anti-government ideologues. “Holy Milton Friedman!” shriek congressional Republicans, echoed by a few corporate Democrats. “Holy Ronald Reagan!” shouts the entire right-wing chorus–“No way we’ll do that!”
Ironically, their excuse is that lifting the wage floor would endanger America’s recovery from the economic crash of 2007-2008, for it would deter corporations from creating new jobs. Let’s count the ironies: (1) poorly paid workers had no role whatsoever in causing the crash–that was done by the highest-paid CEOs and wealthiest speculators; (2) five years after the collapse, those same CEOs (aka “our job creators”) are still deliberately avoiding job creation, even though they’re awash in cash and enjoying generous taxpayer subsidies; and (3) the reason they’re not hiring is that consumers aren’t purchasing their products, thanks to the economic realities of lost jobs, wage cuts, and inflation that have shrunk the buying power of working families.
The one simple step that would immediately add juice to the consumer economy (which accounts for two-thirds of America’s economic activity) is to do the one thing that boneheaded lawmakers adamantly refuse even to consider: Raise the spending power of millions of low-wage workers by hiking the legal minimum wage.
How high? Raising it to $10 an hour would elevate 30 million hardworking Americans now paid a poverty or near-poverty-level income. [NOTE: In terms of what $10 buys, this would lift the value of the minimum wage only to what it was back in 1968, when worker productivity was only half of what it is today.] Importantly, while it would still be tough to raise a family on a $10 wage ($20,800 a year), it does move our country a lot closer to the principle that work ought to be fairly rewarded, restoring a measure of ethics to the work ethic.
Such a percolate-up solution would provide a huge and direct lift out of our present doldrums, for those 30 million hard-hit people would put this right back into the economy, buying basic goods and services they’ve been having to do without. A study last year by Chicago’s Federal Reserve Bank found that every dollar increase in the minimum wage produces an immediate bump in the next year of $2,800 per recipient in consumer purchases of everything from kids’ shoes to vehicles. The Economic Policy Institute (EPI) reported in a 2009 study that even a boost to $9.50-an-hour would result in $30 billion a year in new consumer spending.
The man from Bain
Percolate-up, however, is not a comprehensible concept among the Friends of Wall Street in either political party, including the prince of private equity, Mitt Romney. He proudly says, flashing his gleaming smile, that when he was governor of Massachusetts and was handed a minimum wage hike by the legislature: “I vetoed it.” He says he’d happily do the same as president. The most important consideration in raising the wage floor, the man from Bain Capital explained in a March interview, is to “keep America competitive” –by which he means: Keep profits of speculative profiteers (like him) high. “So that would tell you,” Professor Romney instructed, “that right now there’s probably not a need to raise the minimum wage.”
Unless, of course, you’re a minimum-wage family… or the American economy.
Mitt is merely mouthing the preposterous and perverse corporate line that lifting the minimum would [prepare to be whopper-jawed] hurt low-income workers. Say what? Here it is from one of the empty suits at the US Chamber of Commerce: “It’s well understood that raising the minimum wage hurts workers on the lower end of the wage scale in that it does kill jobs.”
Actually, no. Numerous in-depth studies show that hiking the wage does not cause either small businesses or giants like McDonald’s to rush out and slash their workforce in order to offset the relatively small cost of paying employees a bit better. To the contrary, most studies show that overall job numbers go up. Moreover, pay hikes boost both employee morale and productivity, while reducing the number of workers quitting (thus saving employers big bucks on recruiting and training replacements).
In today’s Koch-headed extremist politics, however, reality is no substitute for ideological purity. Using both the “job-killer” hogwash and the right-wing’s religious fervor against all things government, assorted politicos are so eager to “help” the poorly paid that they not only oppose increases, but harangue against the very existence of a wage floor. In such places as Alaska, Connecticut, Kentucky, Missouri, West Virginia, and Washington State, assorted GOP and tea party candidates for Congress have called for abandoning our nation’s 74-year commitment to a legal protection against wage gouging. And two of this year’s GOP presidential contenders–Michele Bachmann and Ron Paul –also joined the assault. Jettisoning the wage floor, postulated Paul, “would help poor people who need jobs.” One wonders, how many of those who would get this “help” were actually consulted by the congressman, and how impressed are they with his assertion that such a move would serve “the cause of liberty.”
Meanwhile, prodded by corporate lobbyists and such Koch-funded front groups as the American Legislative Exchange Council, extremist GOP governors and legislators in Arizona, Florida, and New Hampshire have been attempting to lower the minimum wage pay allowed in their states. Florida’s finest, for example, proposed cutting by more than half the legal minimum for restaurant servers, knocking them down from a measly $4.65 an hour to $2.15. This was defeated, but it’s worth noting that one of the low-wage profiteers behind this despicable push was the Outback Steakhouse chain–owned by Mitt Romney’s Bain Capital–from which he still draws a very nice annual payout.
As president-elect in 2008, the man who won by asserting the audacity of hope, made a bold, flat-out pledge: “People who work full-time should not live in poverty… [I] will further raise the minimum wage to $9.50 an hour by 2011.”
Great! But that deadline came and went–and so did Obama. It’s not like he tried and was beaten back by corporate-hugging Republicans in Congress. Democrats controlled both houses in 2009-10, but he simply made no effort to fulfill this promise. Granted, he was focused on healthcare, his Afghan adventure, and passing the economic stimulus, but even his labor secretary was pointing out last year that upping the wage would be a big, immediate, and popular stimulus. Why not just grab it?
A leading wage-policy expert, Heidi Shierholz of EPI, spoke for a lot of us last month when she said, “I get mystified by the politics surrounding all this.” Indeed, it’s absurd that the White House has not grasped this issue with both hands. MESSAGE TO OBAMA AND DEMOCRATS: THIS IS A BIG-TIME WINNING ISSUE–DON’T JUST STAND THERE, RUN WITH IT! Look at the positives behind such a policy:
It’s a big boost for millions of Americans and for our foundering grassroots economy, plus it comes with a powerful moral argument that makes it compelling to big majorities.
Eighteen states have already raised their minimums above the federal level, eight of which have made future raises automatic by indexing the wage to rises in the cost of living. Among states considering raises this year, battles are being fought in Connecticut, Illinois, Missouri, New Jersey, and New York.
Not only do labor and a host of progressive organizations back an increase, but so do thousands of businesses, ranging from Costco to local independents, as well as such associations as Business For a Fair Minimum Wage, the Greater New York Chamber of Commerce, and the US Women’s Chamber of Commerce.
Many Republican lawmakers are on board for an increase–the 2007 bill raising the wage by $2.10 got the support of 82 House Republicans and five senators (not a huge number, but a significant bipartisan showing).
Most important of all, the public is overwhelmingly behind the increase. This June, a Zogby Analytics survey of likely voters found seven out of 10 supporting a raise above $10 an hour (including 54 percent of Republicans). Notably, 71 percent of young people (18-23 years old) favored it. Likewise, last November’s “American Values Survey” by the Public Religion Research Institute shows two-thirds of Americans in favor of a $10-per-hour minimum. Included among the supporters were these interesting tallies:
52 percent of Republicans 66 percent of Independents 74 percent of women 73 percent of 18-29-year-olds 73 percent of Catholics 61 percent of white evangelical Protestants 63 percent of college grads 65 percent of those making over $100,000 a year
The only two groups to oppose the raise to $10 were (1) 56 percent of those who identify with the tea party, and (2) 54 percent of those whose most trusted news source is Fox TV.
Who are we?
Last month, July 14 marked the 100th anniversary of Woody Guthrie’s birth (yes, Bastille Day, for those interested in poetic coincidences). The legendary grassroots troubadour wrote and sang the stories of grassroots folks and Depression-era injustice, including this poignant verse:
“Now as I look around, it’s mighty plain to see This world is such a great and funny place to be; Oh, the gamblin’ man is rich, an’ the workin’ man is poor, And I ain’t got no home in this world anymore.”
Imagine the songs Woody would think up about today’s disparity between the ever richer gamblers and increasingly impoverished workers in our land of plenty. We’re paying a seven-and-a-quarter poverty wage for millions, while the top 10 hedge fund gamblers on Wall Street hauled off a combined $1.753 billion in personal pay in 2010–that’s an average hourly wage of $84,278 for each.
The super-rich are fast separating their good fortunes from the well-being of the many. It’s not just America’s economy they’re skewing, but our values. They’re destroying the place where egalitarianism, upward mobility, and the middle class once had a welcoming home. That’s the fight we’re in–a historic fight to decide who we Americans really are.