Minimum Wage: The Continuing Crisis
The Senate considered, and rejected, two proposals Monday to raise the current federal minimum wage of $5.15 for the first time in eight years. Democratic Senator Edward M. Kennedy of Massachusetts, sponsor of the first proposal to rise the hourly wage to $7.25/hour said:
I believe that anyone who works 40 hours a week, 52 weeks a year should not live in poverty in the richest country in the world.I couldn't agree more. It's not enough for the "pro-business" lobby to shoot down a minimum wage hike becuase "it's going to make it harder for us to be profitable". And I think it's straightforward dishonest when they say that "jobs will be lost if Congress raises the minimum wage". Oh yeah? That's going to be the crisis -- when we raise minimum wage? How about the ongoing poverty crisis? In the Journal of Sociology and Social Welfare, December 2003, an article called American poverty as a structural failing: evidence and arguments summarized the problem:
....a major factor leading to poverty in the United States is a failing of the economic structure to provide viable opportunities for all who are participating in that system. In particular, the labor market simply does not provide enough decent paying jobs for all who need them. As a result, millions of families find themselves struggling below or precariously close to the poverty line.Opponents of "living wage" policies make me sick to my stomach. I'm going to go out on a limb and assume none of these lobbyists and pro-business pundits have ever tried to feed, house, and clothe their family of four on less than $18,850/year.
posted by Sean @ 3/08/2005 09:22:00 AM
7 comments
7 Comments:
One problem that prevents a living wage strategy from working is its inflationary effect in a fluid economy.
For example, if the solution were that easy, why not set the minimum wage at $75,000/year? Certainly everyone could survive on that.
Unfortunately, the increase in the production costs of goods and services would merely shift the bell curve to the right - the people paid the least would still not be able to afford everything the proponents of the plan wanted them to have. Though $75,000 is an overstatement, the effect is consistent.
Whether its $75,000 or $25,000 or $15,000, some people are going to earn less than enough to get by in a society that uses capitalism to value someone's labor.
Even with the minimum wage where it is, some are risking their lives to cross the border and work for less.
I understand and believe that for most people, the compelling emotion behind such a scheme is sincere and well intended; by pointing out this flaw, I'm certainly not trying to make anyone sick.
If I understand you correctly, when you say "some people are going to earn less than enough to get by in a society that uses capitalism to value someone's labor" what you mean is that we -- as a nation -- will and must have, by our very nature, "permament poverty". Or, a "permanently poor class". I know we don't like to talk about "class" so we can leave that word out of it.
Why not repeal the minimum wage, then? Why should the government prop up any minimum wage scale for workers -- and mandate it for employers? If an industry can't afford to pay workers a compelling salary, the workers will work elsewhere, correct? And if certain industries are having trouble finding workers, we can just change the visa regulations to allow more immigrant workers in to work those jobs, right? There are people in the world that will work for just about any amount of money, as long as we open our borders to their entry.
It would seem to me as well that we shouldn't have a progressive tax structure for these people -- if someone isn't earning income that puts them over the "poverty line" why should they get a tax break because of it? I am valued more in our capitalistic society when I earn more, but why should my earning more mean I have to pay more to the government?
Here is an article about the effect of low wages and worker shortages on the crab industry in the DelMarVa region. Crabmeat processors won't (or can't) pay wages that interest even immigrant workers, and they haven't been able to convince Congress to raise the work visa limits to allow in even more low-wage immigrant workers. So the industry is teetering on the brink. Is this the crab industry's just capitalist desserts? It's an interesting situation.
In response to Randy's $75,000/year example, I would just like to point out that the minimum wage hasn't been increased in nine years. Although I see your point in theory, no one is asking for a ridiculous increase. Unfortunately, we can't rely on the good will of the average American company to pay their employees appropriately. What we've learned is that, given the opportunity, most employers will pay workers the least amount they can get away with. That is why the minimum wage was enacted in the first place. Of course, if we made the minimum wage $50 an hour, we might see some inflationary impacts. But, I hardly believe that increasing the minimum wage to a measly $7.25 is going to impact our economy.
I want my $2....
A $2 increase in the minimum wage equals in a little more than $4,000/year, per employee.
Whether it is 10 employees at the local florist's shop ($40,000) or 800 impossibly unhelpful Sprint retail stores ($32,000,000), the net impact to a business will result in higher costs of what consumers pay.
The local florist is not sitting on a pile of hoarded cash. She has fixed expenses such as rent for the store, a loan payment on the delivery van, maybe a business loan, probably a home mortgage, too. An additional $40,000 in expenses will have to come from somewhere. Where? Will she get the bank to lower her mortgage? Unlikely. Will she raise the price on flowers? Certainly.
Sprint or any other large employer is under the same financial restraints, with much bigger numbers.
The effects are not limited to the employers and consumers alone. How many pensioners own a share or two thousand in Wal-Mart? Or how many thousands of pensioners own how many thousands of shares of mutual funds that own millions of shares of Wal-Mart? What happens to their Wal-Mart stock when their 4,800 stores must pay more than $1 billion in additional labor costs?
The idea that businesses, whether small or large, are hoarding large piles of cash is a myth. There is no measly amount.
Sean wrote: If I understand you correctly, when you say "some people are going to earn less than enough to get by in a society that uses capitalism to value someone's labor" what you mean is that we -- as a nation -- will and must have, by our very nature, "permanent poverty". Or, a "permanently poor class".I think it is pretty established that one result of Capitalism is poverty. However, nothing about this poverty keeps anyone in it... this isn't a caste system... and we're not in India. I reject the notion of a "poor class" and would replace it with an understanding that poverty is a situation that people can get into and get out of.
Sean also wrote: I am valued more in our capitalistic society when I earn more, but why should my earning more mean I have to pay more to the government?Careful, that's going to get us talking about how a "progressive tax" equates to a tax on productivity! Let's save that for another blog.
I'm just a caveman and I don't understand all your talk of a fluid economy, living wage, and inflationary effect... but I do have a question. Using your flower shop example--over the past 8 years, haven't the costs of operating the business (mortgage, equipment, supplies)--and subsequently the price to consumers--risen with general economic inflation every year? But, the minimum wage hasn't increased in 8 years. To me, an increase in the minimum wage now is just bringing the wage up to a level in line with other costs/expenses/prices (which have been increasing every year for the past 8 years.) The florist shop owner who was paying her delivery driver minimum wage was getting away with an artificially maintained cost benefit. As her other expenses increased due to inflation, so should her employee wages--if we're using a capitalist model. Right? Or is that just an overly naive analysis?
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