By Marshall Auerback, a hedge fund manager and portfolio strategist. Cross posted from Alternet
A raise in the minimum wage is smart economics and beneficial to society. So what are we waiting for?
In recent months, a number of states have again taken the lead on measures to raise the minimum wage. Massachusetts is moving toward a minimum of $10 per hour. Other measures are on the table in New York, Illinois, New Jersey, Connecticut and Missouri. Meanwhile Sen. Tom Harkin, D-Iowa, is pressing for the federal minimum wage to rise to $9.80 per hour by 2014.
This is far more sensible policy than symbolic nods to the left through gimmicks such as the so-called Buffett Rule, which might raise new revenues from the mega-wealthy through taxes, but will likely amount to very little because gazillionaires can hire clever accountants to help them get around it. No, we need policies that clearly do something for hard-working people who have been clobbered by a financial crisis they didn’t create.
Here are five reasons why we should cheer for working America getting a raise.
1. Good for Families: According to economist James Galbraith, raising the minimum wage would raise the incomes of 28 million Americans. Women would particularly benefit because they tend to work for lower wages than men. As Galbraith sees it, raising the minimum wage is family friendly policy:
With more family income, some people would choose to retire, go back to school, or have children, making it easier for others who need jobs to find them. Working families would have more time for community life, including politics; Americans would start to reclaim the middle-class political organization that they once had. Because payroll- and income-tax revenues would rise, the federal deficit would come down. Social Security worries would fade.
2. Good for Economic Recovery: To get the economy back on track, spending power has to be in the hands of those who actually spend in the real economy. That means regular people, not the super-wealthy who tend to hoard wealth or invest in financial products. The minimum wage story is not just a story about income inequality, but rather it’s about an elite that has hijacked the economic system and made it work less productively than before while redistributing more of what is working to themselves.
The problem with our economy today is that the growing gap between the real wages and productivity has violated the traditional relationship between real wages and consumption. So if the productivity of each worker is rising strongly, yet that worker’s capacity to purchase (the real wage) is lagging badly behind – how does economic recovery which relies on growth in spending sustain itself?
Which is why policy should be more directed toward programs that increase the minimum wage and less of discredited neoliberal “trickle-down” economics. Trickle-down economics is largely counterproductive because it shifts more resources into the hands of those who have less propensity to spend and keep the economy moving.
3. Helps People Get Out of Debt: During the early part of the post-war period, particularly the 1950s and 1960s, entrepreneurship was more concerned with building productive capacity and putting workers to work actually making useful things as opposed to creating financial Frankenstein products like credit default swaps.
As our economy has become increasingly directed toward Wall Street and the so-called FIRE (finance, insurance, real estate) sectors, more wealth has migrated to the top 1 percent. On top of that, real wages have increasingly lagged behind the growth in productivity. It is also clear that hours worked and persons employed in the “productive” sector have been in decline over the last few decades.
Prior to the 1970s, when flawed neo-liberal ideas started to gain prominence, the growth of real wages largely tracked productivity growth, which meant that as the productive capacity of the system expanded, the capacity of the workers to maintain consumption standards out of wages also grew in proportion. There were high incomes produced, but these typically came from success in building things and spreading the gains (somewhat to workers).
Today, high incomes come from the financial sector capturing an increasing share of national income and using it to shuffle financial assets in the financial markets casino which adds about zero to productive output.
An increase of a couple of dollars per hour or more in the minimum wage could make huge improvements in the difficult existence of the working poor, perhaps allowing them to exit the debt treadmill and stand a better chance of eventually rising into a revitalized middle-class. Admittedly, corporate profits might suffer a little and some businesses at the lowest end might disappear. That said, corporate profits as a percentage of national economic output are already at an all-time record levels. And it’s questionable whether such levels of profitability can be sustained. Firms have lots of unused capacity lying around because people can’t afford to buy products and services. Sluggish sales growth is directly connected to lagging wage rates.
At the same time, dependence on food stamps has surged by over 14 million over the same period. And “financial engineering” has helped to create a significant escalation in debt being borne by the private sector, particularly consumers. Surely we need a better model than that?
4. Protects Workers From Abuse: A higher minimum wage would also help to mitigate the abusive, exploitative working practices of a number of employers, who take advantage of the currently low minimum wage to seek cut-rate help. Such employers often use undocumented labor, which further undermines America’s working poor.
5. Justice for Working Americans: Most of all, a big jump in the minimum wage would be a reparation. Because let’s be clear: class warfare has already been undertaken on behalf of the 1 percent. The past 30 years have witnessed a dramatic redistribution of national and personal income in favor of profits for the rich. At the same time, this period has been associated with a dramatic decline in the performance of the US economy. To raise the minimum wage would be literally the minimum we could do for those who have suffered from the economic crisis: the working population. It would be an act of justice.
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While I am sure many hungry workers with several cutoff notices in hand and no gas in the tank would appreciate each and every nickel… ten dollars in this day and age is an insult. Minimum wage needs to triple just to catch up with the lost earning power of minimum wage over the last 35 years. At the very least sincere advocates of a decent basic living wage should begin at triple or higher – with establishment of single payer for all.
You are right (as in correct), ES, the aim should be a “living wage” and by that it should mean what is needed for a single wage earner to make in one decent job with decent hours to raise a family …. There used to be such animals within my memory …. There can be again ….
I agree. Ten bucks an hour was the minimum real wage in New York 20 years ago.
“Working families would have more time for community life, including politics;”
Oops, should have kept that a secret – that’s the last thing TPTB want ….
Without being tied to some sort of job guarantee or employer of last resort program, employers will just use this as an excuse to cut more jobs. My prediction is you will still see the wage share of profits continue to decrease, you’ll just have a higher unemployment rate.
Simply not true. If businesses didn’t need the workers now, they would already have been fired.
The question is whether the increase in demand would occur quickly enough to compensate for firms increased costs.
Some marginal firms would fail, but considering that much of corporate America is sitting on huge amounts of cash, they can readily afford it.
As pebird says, it’s not like they’re not reducing worker numbers as far as they can already. However, there is another method than can be used in addition to minimum wage: maximum hours. Europe already has this in the European Working Time Directive.
To forestall the libertarian wailing about government forcing people not to work, this does no such thing. You can work like a dog on your garden, the great American Novel, or whatever. It just limits the hours an employer can employ you for in a week.
Employers that cannot employ two workers for fifty four hours a week each, must employ three for thirty six hours each.
Just what America needs: raising the minimum wage in conjunction with deflation. With any luck, prices will fall enough soon where a young person can actually afford to buy a house or car, without taking on debt.
Why pussyfoot around ? If raising the minimum wage is the answer to poverty, just raise it to $30/hr. Problem solved, right ? People will be happy to pay $40 for a quart of milk knowing that the stockboy is getting a decent wage.
They don’t mind high prices for no unemployment in Japan. Why do we hate the stockboy so much in the US?
Something tells me that unless we extend the minimum wage to cows, the price of milk won’t go up to double digits any time soon.
“Why pussyfoot around ? If raising the minimum wage is the answer to poverty, just raise it to $30/hr. Problem solved, right?”
Oh, yeah, great point. Like, if someone makes a case for raising interest rates by 1%, you could respond by saying, “why not just raise interest rates by 30 points then?”. If you make a case for something, just go to the most extreme lengths and pretend that more moderate changes are no different. Yikes.
Right now there is a lack of effective demand and poor working people have a high propensity to consume and high marginal propensity to consume. There would be a relatively small increase in labor costs, but that could easily be offset by increased demand for products and services at the aggregate level. Clearly lowering wages has not worked in any country that has gone through a situation like we are in, and we have seen the real incomes of the working poor go down massively in recent decades, especially since the crash began in 2007. Demand would INCREASE, not decrease, with a raising of the minimum wage. The question is if that demand would offset the increase in wages. Anyone saying with no shred of doubt that demand wouldn’t is doing so for self serving and/or ideological reasons. Maybe it wouldn’t, but it would just as likely do so.
From Card and Krueger’s famous, of infamous I guess depending on your ideological stance, study on the minimum wage in the food industry: “Finally, a reanalysis of publicly available BLS data on employment trends in the two states shows no effect of the minimum wage on employment in the eating and drinking industry.”
“Based on all the evidence now available, including the BLS ES-202 sample, our earlier sample, publicly available BLS data, and the BNW sample, we conclude that the increase in the New Jersey minimum wage in April 1992 had little or no systematic effect on total fastfood employment in the state, although there may have been individual restaurants where employment rose or fell in response to the higher minimum wage.”
While I would intuitively want to agree with the raise in minimum wage, I also have the fear that it directly leads to companies doing 2 things:
1) Cut more jobs
2) Raise prices on their goods
CEOs’ job is to maintain or increase profit margin (which is sad in a sense, but true). If you raise minimum wage, they will absolutely not accept to lose profit for it. They will find ways to compensate, and you can be pretty sure that it will be by doing one of the 2 points above. They will assume that hey, if people could buy their goods at say 2$ when they were making 8$ per hour, they should be able to pay 2.50$ for them if they make 10$ per hour, no? And at the same time, they end up impoverishing society as a whole through high inflation (while non-minimum-wage salaries won’t increase accordingly) + a higher level of unemployment.
I don’t know, I’m not too sure what to think about this. I would gladly make the argument that Marshall makes because I am whole-heartedly in favor of improving the conditions of employees on the lower-end economically. If someone can explain to me why my reasoning is wrong, I’d be happy to be convinced otherwise. But as of now I don’t really see how increasing minimum-wage can work long term. It can benefit employees in the short term through sticky prices, and it will definitely benefit some people long term, but I’m not sure that the global effect is positive simply because of what companies will end up doing to compensate, because I am convinced that it won’t be reducing their profits to redistribute it to their employees. History shows that they just never do that.
The last company I worked for slashed their workforce to the bone during the days when the minimum wage hadn’t been increased for years.
But none of these “fixes” can be considered in isolation – if, at the same time as we raise the minimum wage, we re-institute a steeply progressive tax on corporate and individual profit, the incentive for increasing that profit is dampened considerably – when raising prices to increase profits raises one’s tax rates …..
The problem seems to be that what might be rational from an individual company’s perspective is irrational collectively. If the minimum wage went up, it wouldn’t hurt every company, since many companies pay above the minimum wage anyway. Wall Street, for example, wouldn’t be directly impacted, would they? Some however that do might see labor costs increase. However, those workers, and workers at other companies, have more money to spend. So if people didn’t lay off workers, demand could increase and that demand could possibly at least make up for the difference in labor costs.
Beyond that though, the minimum wage hasn’t grown in real terms since the late 60’s. Wages haven’t grown in decades. We really should ask ourselves what type of society we have created. How long should wages stagnate? How long should we let the minimum wage stay where it is? If we are asking questions about how appropriate it is to pay certain workers, why stop with the working poor? Would people be ok with the minimum wage being the same for the next 50 years? So no increase in the minimum wage for a century?
Maybe we should apply a maximum wage to accompany the minimum wage. That is what the capitalists did to workers when the capitalist system was being born. Marx talked about that a lot in the first Volume of Capital. A maximum wage law for workers. Maybe that should be applied at society at large (a maximum wage that is), along with a minimum wage increase.
What deflationary pipe are you smoking?
In the last thirty years (my adult life) here in NW Arkansas, which is a very low cost place to live fresh food is at least ten times higher, gasoline five times, propane roughly ten times, firewood has only tripled, basic rent eight to ten times (sometimes more). Auto insurance wasn’t mandatory, nor was health insurance. Sales (regressive) taxes as a percentage are at least thirty percent higher across the board.
I just bought a thirty year old boat at a real bargain on craigslist, which I paid one hundred dollars less then the original full retail price on the owners manual.
So I ask again, what deflation are people who earn 50k or less a year experiencing?
Raising the minimum wage is one of those progressive fixes that don’t actually do anything, but make some politicians seem to be doing something.
The value of currency ultimately depends on how much labor, or labor-derived goods and services, you can trade it for. If the basic wage is increased, then the rich, who have almost all significant power in the polity, economic as well as political, will simple raise their prices, profits, dividends, salaries, fees, payoffs, zero-interest loans, and so forth to account for the change. Only small-scale savers and people on fixed incomes, in other words, the working class and the poor, will be harmed.
Applying yet another fix to capitalism is not the answer to the problems of capitalism. We need to find a way to replace it.
But the rich CANNOT increase what people owe in nominal terms so a rise in the Minimum Wage would help the employed to pay down their debt.
But we should do far more instead. Let the Federal Government ban further counterfeiting by the banks (so-called “credit creation”) and bailout the entire population equally, including non-debtors, till all credit debt is paid off. And if that bailout was metered appropriately then it could be done with little price inflation risk.
I’ve been thinking about this for awhile.. all studies relating to minimum wage have always reported that minimum wage has little to no effect on hiring and that despite what neoclassical economics would tell you minimum wage has minimal impact overall.
Is it possible that the reason raising minimum wage works is because of the fact that labor is currently so undervalued that the true value of labor is hidden under pressures from high unemployment?
I’d imagine increasing minimum wage results in a slight boom in the economy before businesses manage to drive the price of goods back up to compensate for their slightly smaller share of the productivity pie and restore the status quo.
But after the prices of goods has gone up, it will hurt all small-scale savers. The 5k that I might have managed to set aside will suddenly become worth say 4k in terms of what it can buy.
I’m not even sure how sticky the prices are when you’re talking about a policy change like minimum wage increase. Employers know ahead of time that it’s coming and by how much, so they can easily scale up the price of their goods at the same time that the raise gets implemented.
So you might not have much of a small boom in the economy at all, you’ll only be left with some inflation that ends up hurting the middle class more than anyone else. As I said above, the bottom line is that the people in charge will not let this affect them, and if it does not it means that the money for the increase has to come from somewhere else.
Yeah, that’s the problem overall. In fact, minimum wage might actually be aiding in the destruction of the rest of the middle class. If it costs a business something, they will oppose it and find a way to lobby the bill into uselessness. Only in the chaos of revolution can real change ever occur…
It’s too bad history always culminates in such things.
“Yeah, that’s the problem overall. In fact, minimum wage might actually be aiding in the destruction of the rest of the middle class.”
Where do you get this? Besides, there is this thing called the working class, the working poor. They exist too. They have given to YOU, the middle class. They create value with their work that has been monopolized by other people for decades, that is them sacrificing for the middle class. Have you traveled through the capital desert that is the modern poor community? Have you seen what the capital flight from the inner cities have done to those communities? Do they deserve a little better life or should we continue to ignore them and only concern ourselves with the dwindling middle class? Midle class this, middle class that. You folks are lucky the the poor working class has been politically de-mobilized. You’d have far more to worry about than a 1 dollar per hour raise in their wages if they were politically organized and active. COINTELPRO was the best gift the middle class ever got from their government.
Besides that class discussion, the minimum wage would impact teens and the elderly. Both would likely spend most of what they earned, and quickly too. The so called “velocity” is very high with those folks, along with the working poor.
“Where do you get this? Besides, there is this thing called the working class, the working poor. They exist too. They have given to YOU, the middle class. They create value with their work that has been monopolized by other people for decades, that is them sacrificing for the middle class. Have you traveled through the capital desert that is the modern poor community? Have you seen what the capital flight from the inner cities have done to those communities? Do they deserve a little better life or should we continue to ignore them and only concern ourselves with the dwindling middle class? Midle class this, middle class that. You folks are lucky the the poor working class has been politically de-mobilized. You’d have far more to worry about than a 1 dollar per hour raise in their wages if they were politically organized and active. COINTELPRO was the best gift the middle class ever got from their government.”
I’m not going to disagree with you on this. In fact, I feel the middle class is already well enough entrenched to give them enough mobility. What I’m arguing against is the fact that the working poor, in the long run, will not benefit from this. The companies will find ways to recoup their losses, increase commodity prices and it’ll result in a roughly equal standard of living. (At least that’s how things have always panned out here…)
My girlfriend works at barely above minimum wage and is attempting to go back to school. Of course, all she’s gotten so far is a 11k loan for something that did not pan out and gets to pay maintenance on that every month. She comes from a family from virtually no social mobility… stuck on a small island with no future.
The entire system is rigged. I don’t care about the middle class but the destruction of the middle class is significant because it allows even more pressure to be exerted on the working poor. Busting unions affects not only the middle class but the poor since it removes one more thorn in the plutocracy’s side.
“Besides that class discussion, the minimum wage would impact teens and the elderly. Both would likely spend most of what they earned, and quickly too. The so called “velocity” is very high with those folks, along with the working poor.”
You mean the very elderly that get to deal with increased prices for basics as corporations attempt to recoup their losses through whatever means necessary?
This affects everyone.
I see what you are saying and I think you make some good points. However, the middle class is being destroyed by forces far bigger and more powerful than something like this. I don’t even think that this will have a negative impact on the whole for the middle class. The TPP? NAFTA like deals? The WTO? The financialization of the economy? That is a different story.
Besides, many people in the middle class are falling into poverty. It makes sense, from a middle class perspective, to pay increasing attention to the working poor. Their current struggles might be a preview of the future for many in the middle class. Creating policies that raise the living standards of the poor and improve the horrible record we have as far as upper income mobility, wealth and income inequality, might benefit middle class folks. If not now, in the coming years as they slide into poverty.
I wouldn’t make too big a deal about the minimum wage as far as increasing the living standards of the poor though. You are right that it alone won’t solve the poor’s problems. More systemtic changes are needed for that. This would just be one, relatively small, piece of the puzzle, nothing more. It, by itself, will not do much in the long run if not accompanied by other, more far reaching, policies.
“The 5k that I might have managed to set aside will suddenly become worth say 4k in terms of what it can buy.”
That’s the case every time the economy grows and your wages don’t keep up with that growth. If you and I are the only two people in the economy, the economy grows and I get all the benefit, even if your wages stayed the same in nominal terms, you own far less of the overall wealth and income than you did before that growth. That can happen to you even when the economy grows and others in the middle class see their wages increase (with yours staying the same). When banks create money out of thin air in the so called fractional reserve banking system, same thing. It seems that if inflation increases because the middle class is buying their shiny new gadgets or their vacations, or whatever, its fine. If that inflation is caused by the working poor, then its time to back into class war mode. Yes, the minimum wage hasn’t really grown since Hendrix was alive, oh well. Whats another half century?
“Employers know ahead of time that it’s coming and by how much, so they can easily scale up the price of their goods at the same time that the raise gets implemented.”
Or, knowing that demand is still low and that people might respond to price increases by saving more, buying alternatives or paying down debt, they might just have to accept lower profits. Again, increased demand could make up for the raise in wage costs anyway.
“you’ll only be left with some inflation that ends up hurting the middle class more than anyone else.”
We NEED inflation nationally. Deflation or stagnation is what happens when wages don’t increase in real terms and people no longer buy more goods and services on credit. Your mentality fits in well with the crowd at the ECB. All they care about is inflation. Full employment, inequality, economic and social justice? Please. Keep the prices of goods down.
This is a really good point. And it’s not about class warfare (at least to me) it’s about making the service economy something that benefits those who work in the service economy (not only those who are owners of services).
I’m far from caring only about inflation. But if you have wage increase of 5% with a 5% accompanying inflation, what did that wage increase give you? Nothing!
From how I understand things, this is what mandatory increase in the minimum wage does. You’ll force 5% increase in salary on companies? They’ll increase their prices by 5% (or more, cause they got an excuse to increase prices and they’ll usually keep themselves some margin), or put some people out, either way basically you’ll have 5% more to pay and 5% more money, so you’re STILL just as poor. But you also lowered the money in savings. It might actually help some with debts though, maybe that could help in some ways.
Of course you want minimum wage to at least follow natural inflation (and some inflation IS good in an healthy economy), and usually it does, but it’s basically the same phenomenon just getting driven by the other end, the poor are still just as poor, but with more nominal money every month.
I’m totally against the ECB mentality btw. I think austerity is a disaster. Privatization of most nationalized services and ressources is a MASSIVE error. Anyway, won’t go in long details about this…
But see, I would not necessarily be against inflation caused by the government injecting money in the economy, hiring people, getting some projects done… because you get inflation accompanied by wealth creation. If you force minimum wage increase though, did you create any wealth or improve the economy in any way? No. But you get something even worse than just plain inflation. You get asymetric inflation. Because an increase in minimum wage is unlikely to boost the sales of luxury items like iPads or new cars (the employees making and selling these are not payed at minimum wage… or if they are it’s in another country!), it’s not minimum wage workers that buy those. It will increase the price of basic needs items, food, cheap clothes, maybe second-hand cars. And this asymetric inflation is going to hurt the working poor and middle-class in the long run much more than the wealthy, because it represents a much higher % of their salary.
“I’m far from caring only about inflation. But if you have wage increase of 5% with a 5% accompanying inflation, what did that wage increase give you? Nothing!”
Well, in a capitalist economy inflation happens when the economy is growing. Kinda obvious right? It can happen at times when production isn’t growing, maybe the currency is collapsing and the country imports a lot of goods and services. A capitalist economy not growing is a capitalist economy dying, ok? So lets assume inflation. If we don’t then we should assume the capitalist system will eventually implode, if not by itself it will politically. So the question is whether or not we will allow the poor, who have been completely ignored by society, to keep up with some of the inflation or not. The question is whether we give a damn about the fact that upper income mobility in the US is lower than most every other country in the OECD. Inflation has increased massively over the last few decades (and spectacularly in regards to food prices around the world in recent years) and, as I said, wages haven’t grown in decades and the minimum wage hasn’t grown since the late 60’s in real terms. So, basically, let the poor communities, and poor workers, rot.
“From how I understand things, this is what mandatory increase in the minimum wage does. You’ll force 5% increase in salary on companies? They’ll increase their prices by 5% …or put some people out”
Where is the evidence as far as the (very modest) increases in the minimum wage causing unemployment? Did you read the Card and Krueger study? Here’s another: http://www.epi.org/publication/briefingpapers_bp150/
As far as price increases, again, you are assuming that increases in demand will not offset the rise in labor costs. Where is your evidence of this? If prices increase workers can cut back spending on the goods increasing in price. They can purchase alternatives. Some may chose to save a little or to pay down debt. You could argue that profits RATES might decrease, but profits might go up nominally because of increased demand too. There is a lot of complexity you aren’t considering here, and you don’t seem to be paying much mind to economic justice.
“I’m totally against the ECB mentality btw. I think austerity is a disaster.”
I said that because of you focusing entirely, here at least, on inflation. If you go to the ECB’s website, hell, most of the sites of the central banks, you’ll get lots about inflation targeting. Not much is said, in the case of the ECB nothing at all really, about full employment.
“But see, I would not necessarily be against inflation caused by the government injecting money in the economy, hiring people, getting some projects done… because you get inflation accompanied by wealth creation. If you force minimum wage increase though, did you create any wealth or improve the economy in any way? No.”
For one, the government is far more likely to try and inflate bubbles and to feed the financial econonmy these days that to increase production. That could lead to far more inflation than an increased minimum wage. If they cared about domestic production they wouldn’t sign the TPP and they’d reverse their “free trade” stance. They’d set up a public bank and get rid of the parasitic private banks and they’d invest in domestic production. Beyond that though, you don’t seem to see that a rise in the minimum wage is the same thing. The government injecting money into the system increaeses demand and inflation, just as the minimum wage would. But wait, you say, the minimum wage “will increase the price of basic needs items, food, cheap clothes, maybe second-hand cars. And this asymetric inflation is going to hurt the working poor and middle-class in the long run much more than the wealthy, because it represents a much higher % of their salary.”
Again, what are you assuming? That companies CAN increase prices. You assume that inflation of these items won’t happen anyway because those not making a minimum wage, or speculators, or people in China or India buying more food and meat, or more people using food stamps for that matter. We know prices for these things have gone up, the question is whether or not we care to raise wages of the working poor to keep up with these price inceases.
Let me ask you a question: As I said before, wages haven’t grown in decades. The minimum wage hasn’t grown in real terms since the late 60’s. Given that inflation of basic items is going to happen regardless, do you care whether or not the working poor can afford those items and keep up with price increases? Do you care? If you do, then what would you suggest to death with the issue other than the minimum wage? Price controls?
The minimum wage by itself won’t greatly improve the lot of the poor, but it could help and is one piece of the puzzle. What I get from you is the old classical idea of the “iron law of wages”. They’re poor, they’ll always be poor, don’t bother. I could be wrong, I don’t know you, but that is what I get based on your posts here.
@Me
Well yes, you are wrong, because I do care a damn lot about income inequality. I think the whole financial system is a mess, and I am pretty far on the left as far as that goes. I’m from Quebec which is already quite left-leaning, and I wish it was a little more. And I am far from rich.
I honestly have no problem with the poor getting more money, quite the opposite. And as I said, I think that the minimum wage should at LEAST follow inflation (so an increase of ~2% per year or something is just normal). I’m not exactly sure what the minimum wage situation is in the US, if the nominal minimum wage didn’t increase in many years, then by all mean raise it to follow this ~2% per year since it was set last time.
But just take the situation here in Quebec, which is still pretty much the same economic system. Minimum wage in the last 10 years has increased by 41.4%. You would think that this should greatly, or at least somewhat increase the situation of the poor, no? But not really no, it basically stayed along inflation. So the people working at minimum wage are in the same situation as 10 years ago.
I dunno. I’m not against minimum salary increase per se. I would LOVE for minimum wage to increase faster than inflation. I just have the impression that they’re so tightly linked, at least as far as base commodities and services are concerned, that you don’t really manage anything by just increasing minimum wage. Yes, it should definitely AT LEAST follow base, normal inflation happening in the economy because it’s growing, that I am absolutely not debating against, by no mean I’m saying freeze base salary for the next 10 years.
But if you increase it by more than base inflation, I get the impression that all you do is increase the amount of inflation that will happen, which in the end hurts the rest of society WITHOUT helping the poor.
Maybe I’m wrong. I’m not claiming to know everything about it or close.
So yes, I DO care about the situation of the working poor, certainly more than you seem to give me credit for. And I agree with most of what you said government should do (though I have little hope that they will do any of it…). The fact that I’m debating (debating, not claiming) that an increase of minimum wage is not the solution does not mean that I’m not for finding a solution! It just means that I do not think this one works. Not raising it above what it takes to just follow global inflation at least, that I agree NEEDS to be done. But do I think OTHER solutions need to be put in place to help reducing income inequality and stop the total injustice that is our economic system? Absolutely. And maybe a greater increase in minimum wage is part of that solution, I just do not see it working as it has been done in the last decade.
But geez, seriously, I believe we’re on the same side here, so no need to be so aggressive and assume so much about me because I debate about whether this particular solution is good or not.
Have you noticed the cost of automation is going down while the cost of people is going up? Where these trends intersect jobs disappear.
As seen with JC Penney eliminating all their checkout clerks, making a bet that automation will save them more money than hiring people.
Work, work, work! What the economy and families need is MONEY, not work per se.
And why would that be the case? Could it be the government backed/enforced counterfeiting cartel, the banks, has driven debtors into excessive debt and cheated non-debtors with negative real interest rates?
Penney’s will soon have competitively automatic checkout counters. I expect the grocery stores will soon follow. You’ll just push your cart through a scanner and you’re done except for maybe swiping your card. What good then will an increase in the minimum wage do for checkout clerks when there are none?
If the economy and families need money then just hand it out. That will indirectly drive up wages, btw, since fewer people will need work so desperately.
We could have avoided this mess if we had adopted ethical money creation long ago. Then the entire population would have benefited from productivity gains instead of the banks and just a few rich.
The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks. Lord Acton
Agree 100%. If rising productivity and outsourcing is decoupling workers from paid jobs we have to find a way to get money into the hands of families.
A hike in the minimum wage to a “livable” wage would be akin to tax cuts for the “upper class”. Once you open that flood gate, it’s almost impossible to close again.
And can you imagine what people going on cash basis shopping sprees instead of credit card shopping binges would do to the economy, not to mention the likes of the impact on visa and the rest of the financial services industry?
aJ, what the Sam Hill are you saying here? Explain please.
The chances of raising the minimum wage is significantly less than the chances of repealing it altogether.
Or, to put it another way, there’s a greater chance of Obama unzipping his pants and finding a pair of balls in there for once.
Less than zero, either way.
An excellent idea! If smaller businesses find it difficult to pay that minimum amount, they could be subsidized until they reach the higher rate of pay over time.
If the government introduced the JG (Job Guarantee), it could start the new minimum wage ball rolling!
A job guarantee would reduce unemployment to such small amounts that businesses would have to pay their workers more. I believe that’s how Japan has been handling it’s economy over the last few years since the end of the lost decade.
The focus on unemployment instead of on inflation seems to be the way to go.
5. Justice for Working Americans: Most of all, a big jump in the minimum wage would be a reparation. Marshall Auerback
Since when should a person have to work for reparations?!
If people have been cheated (and they have been) then just give them new fiat. And btw, credit creation cheats everyone, not just underpaid workers.
Steve Keen’s universal bailout (which he calls “A Modern Debt Jubilee”) is a much more just solution than raising the Minimum Wage.
Afraid of the Religious Right? Then read the Old Testament and learn that counterfeiting, usury from one’s fellow countrymen and oppression of the poor are all condemned there. Yet our money system is based on all three!
That’s what I used to think–that the way to deal with the so-called “fundamentalists” is to out-fundamental them. But then I realized that this is not the heyday of the protestant reformation, and that the sadism and urge to punish the wicked of these nominal Christians is a just primary human impulse– just like that of everybody else.
So, what the bible says or doesn’t say isn’t going to make a bit of difference.
The only thing that is going to make a difference in terms of political viability is finding and coordinating a package of well thought out measures that relieves the varied pressures experienced by a broad and varied constituency, effectively buying off the “gimme” you give one group profile with “gimmes” for other group profiles, (which likely includes small business owners).
Relieving the pressure across the board is the only thing that has a chance of working because it is the pressure–and the mere whisper of an idea that someone else’s benefit might come at their expense, thereby increasing the mental pressure– that makes them all even nastier than their culture has already made them.
Just consider the comments about how the sinful unemployed spend all their time on the couch in front of the teevee.
re: “the sadism and urge to punish the wicked… is a just primary human impulse”
should have said “the urge to punish is just a primary human impulse,” not “a just human impulse.”
See how hard it is to outgrow? ;)~
Relieving the pressure across the board is the only thing that has a chance of working … JTFaraday
Agreed which is why I push a universal bailout. As far as I can see, a universal bailout, if done properly, would hurt no one except the true SOBs who desire suffering for others.
correction: who desire suffering for innocents.
How about people who pass these laws or express their support for it PAY the difference between market salary and minimum wage out of their packets? Since when minimum wage worker is obliged to have a car?
No sh*t, Sherlock … nor should wage earners be obliged to have a livable shelter, utilities, food, clothing, or an education. What sort of Marxist dystopia do we want, anyway? If they can’t afford such things in exchange for full time work then let them liquidate their trust funds. Sheesh.
Uh, there’s this thing about getting to work and back.
But we could just build dormitories for them, yes? And they can walk back/forth on weekends, with all that extra time.
And since you’re avid for “feet on the ground” commitment, you can be the first one to do it, as an example to all the rest of us.
I’ll keep my eye out for your blog on how that works out for you.
My dad used to commute to work using mass transit. O, where was that, back in USSR. If workers don’t like the pay, they are free to seek better pay elsewhere. Noone is obliged to buy products/services enterprenuers are producing, why should they be forced to pay some arbitrary salary that some beuracrat determines minimal? Would you rather have more people employed at lesser pay or less people employed at higher dictated pay? Market prices aren’t determine by vote hungry politicians. Human capital is just like any other resource in the economy which ought to be ECONOMISED on.
How about businesses having to pay free market interest rates for their employees’ savings? Those savings that are often used to automate their employees’ jobs away?
The best way to raise the minimum wage in the longer perspective is to have an economic policy that in the real meaning of the word create full employment. But that would violate the dogmas of neoliberal economic religion, the neoliberal Gods would very angry or at least the high priests that interpret the will of the Gods and of course the sponsors. Not that isn’t possible to achieve, it have been empirical proven, not least in the post war decades of “Wirtschaftswunder” in the industrialized world. The neoliberals have been very successful to burry this knowledge in oblivious dogma.
Auerback and the cohort of good hearted economics keep on and arguing what should be rational and common sense and common good in an enlighten society. But it’s not about rational argument and common sense, it’s about raw power, and those with power aren’t at all interested in rational arguments. Only a sign of massive raw power and force will make them change.
The worlds as we know it is at a critical junction, good forces have probably lost for know. The age of enlightenment have come to an end, at last they probably have reversed the forces let loose by the French revolution. As we can see not least in Europe and also in US reckless illogic dogmas is spouted on a daily basis by politicians and people in power. The dark ages are back with a vengeance.
The outburst of a few economic decades of economic democracy in the postwar had its special causes. These years were an empirical example of that it is possible but in an historical perspective they aren’t the norm, the rule is rather the opposite. After boom and bust and two big world wars the elite was exhausted, this paired with the soviet/commie threat made the post war boom possible. Soviet/commie had shown its abilities in the WWII and the 30’s with massive industrial build up, the western elites thought this should be a real attraction for masses in the west. So they allowed the full employment and the welfare state that is natural consequence of that. It wasn’t rationality and common sense that let it happen, but the rationality of a real threat and the raw power of this intimidation.
Don’t be such a piker! Make it $100/hour. Everybody will be rich!
that would be great. And cut the defense budget in half. And stop bombing innocents every day. and stop the the ‘state’ from infiltrating our meetings and leading on the disaffected….from our meetings….to then put them in prison. And setting us non violent anarchists up for felonies also.
It comes to a time where facts and information, just don’t really get us ‘happy’ nor ‘safer with knowledge’ with better ‘armor’.
It’s over. Bottom half think the whole damn system is over. Ask us.
A woman last week on Guerro and 17th lit herself on fire.There is a new crazy person on the street here every week. Budget cuts. Cops are still frisking every kid with a hoodie and making them lie on the pavement like criminals. Yes, even in SF. I’m white….and I am angry as hell. I scream at democrat canvassers. They are bigger liars than the republicans. I hate nancy pelosi…always have. Single payer off the table. Thanks ms. lenin. So is A BIG BOOST IN THE MINIMUM WAGE. These people don’t fucking care. They are ALL sociopaths. Pelosi her whole career has voted against her base. Some democracy. Capitalism does NOT follow logic. Quit trying to be logical with evil rapist mass murderers. sorry, that’s just what I have to say.
As illuded to by others, minimum wage is so low that increasing a little bit will not result in the same traditional spending pattern changes of those receiving the wage increases in higher strata incomes. The author illudes to it in the section on debt discussing food stamps.
If you are working minimum wage, you are likely too broke for basic necessities and in some form of dependence on others or the government, and if you are able to get a wage increase it is only going to be for necessities which tend to be commodities not ipads, and reduced dependence and resource utilization efficiency.
So I see th primary impacts of higher minimum wages as helping our government debt, producing more demand for basic necessities, and asymmetric increasing consumer costs for service based items who’s high percentage of cost is based on minimum wage, both of which would reduce consumer money available for purchase of durable goods.
It would definitely stir the pot, but I’m doubtful of someone being able to claim clear victory in hindsight.
So I see th primary impacts of higher minimum wages as helping our government debt, … Tim
“Helping” to increase it? That’s a bogus concern according to MMT. We need MORE Federal Spending though it need not be financed with borrowing which Bill Mitchell calls “corporate welfare.”
How about banning government debt constitutionally? why kids ought to pay (with interest) for expenses their parents chosen to have? Good people of San Francisco mortgaged their own homes to have Golden Gate erected. They stood to benefit, yet they took the risk as well. Bottom line – you want something – PAY for it.
How about banning government debt constitutionally? Sherlock
Agree! The US Federal Government is monetarily sovereign; it has absolutely no need to borrow the money it creates. Unfortunately, the Fed also creates money for the benefit of the banks which should be 100% private but aren’t.
Ah, yes, mandating wages is so good!
In fact, lets have a real life example.
Background: My wife and her mom run a small infant only daycare. It has 7 employees, 2 near full time hourly, and several part timers. Being that it’s specialized, care costs $50 per child per day, with 4 days average use and a maximum of 9 children, but it averages 8 per week. It averages $400 per child for a two week pay period.
Since we are in Washington, minimum wage is $9.04 per hour.
Since I’, generating 941’s at the moment, let’s look at the effect of a $1.00 increase in the minimum wage, or or an 11.06% raise.
We had 351 payroll hours worked in a typical month. So that’s an additional $351.00. Employer FICA and Medicare runs an additional $27, and SUI is $8. Total effect of the $1.00 raise is $386.00.
Over an average of 8 infants this works out to a needed increase in prices of $48.25 per child per month, or about a 6% increase in rates.
On the employee side, of the additional $351.00 in wages, $20 of the increase goes to FICA / Medicare, and another $30 to federal withholding. All of this is divided among 7 employees. The highest paid person will collect an extra $75, less $5 for FICA/Med and $10 FWT for a net of $60 per month.
Now, just to remain near our break even point, we had to raise rates 6%. Apply this example average as a generalization across the board, and ask exactly how far that $60 a month is going to go.
It’s worse for those making above the minimum wage, as they just lost 6% or so of their purchasing power to rising prices. It’s a safe bet that employer’s aren’t going to tack on either a $1 per hour real dollar raise or comparable 11.06% percentage raise.
Please note that the Federal Government is the big winner here, nomming 5.65% plus FWT from the employee, and 7.65% from the employer. Step 3. Write IOU to SSA. Step 4. Profit!
So, Mr. Auerback, can we have less speechifying about “Justice,” and more reality? That minimum wage increase is nothing short of a transfer payment to the federal government and large corporations such as agribusiness/food cartels, oil/fuel companies, banks, national retailers, etc. They will raise their prices more than their costs, as it’s logically the time to squeeze in a half percent or so above and beyond their cost increase, with such a juicy excuse.
This makes me question your motives here. Are you cheereleading on the field for the teams, in the pressbox pumping out the juicy propaganda that will increase owner’s power, or are you in the owners box gladhanding the elites?
It’s certain you’re not outside the stadium, where you should be if you were truly doing something to break the hold of the elites…
Your numbers would work even better if we reduced the minimum to $5/hr!
Scrabbling for dollars at the bottom of the pile.
“Scrabbling for dollars at the bottom of the pile.”
Why thanks! I do enjoy trying to make payrolls, provide jobs, and provide needed services to families who have to work 2 jobs because they’re farmed like cattle by elites, governments, and large corporations.
Oh, and when we’ve been short on cash to pay taxes, guess whose pocket it comes out of? Mine, of course! I work a regular job, too.
By your comment, I infer the following:
1. You are not an employer.
2. You don’t pay employer taxes.
3. You don’t take the risk of being an employer.
4. You don’t have any appreciation or knowledge of the costs required to employ YOU, and worse, I judge that you don’t care.
So I’ll keep 7 people employed, thanks, and I’ll pay them what it takes to keep quality employees.
And FYI, when running a small business it’s the owner who is on the bottom of the pile, not the employee. They have to scrabble for dollars every day versus people with your similar mindset.
So please, go on supporting elites, governments, and large corporations who will cheer for minimum wage increases because it’s another competition destroying regulation and barrier to entry.
blunt, we are scrabbling with each other down at the bottom.
It is not really possible to scrape by on $9/hr if a person also wants health insurance. And a functioning second-hand car. It works only as a wage for the beginning worker or as supplemental wage with another person in the family bringing in money.
It is also true, as you clearly demonstrate, that it’s not possible for a small business to manage if it pays its workers a living wage.
There is the crux. We are in this together–in your case: you/wife, your workers, the infants’ mothers. It is cooperatively that the issues need to be addressed.
From the way you presented your situation, it *would* be easier if wages were $5/hr. You need a fuller argument and a different conclusion.
Stop with the elite crap, ok? It’s much too easy and has the extra problem of being totally uncorrect.
Patricia,
I will maintain my position on elites, but will retract the reference to your support of them, as it is admittedly difficult to know your position with such a limited response.
Your thoughts here are correct; for a great many job functions living wage is not possible.
Minimum wage jobs are no longer the “secondary” or entry level type of job, as stiff competition in the work force has made these primary jobs.
The primary problem with minimum wages is that they inevitably drive up price inflation, just as health insurance (which includes medicare and medicaid) is solely responsible for the geometric increase in health care costs. Health insurance acts like credit inflation on the price of healthcare. The underlying asset, healthcare, is bid up in price by sellers due to the availability of dollars to pay without attention to the ability to repay. Paying cash, for either a house in 2006 or a 10 day ICU stay, is unheard of, and frankly nearly impossible for all but a slim slice of people.
But I’m getting away from the main point, which is that it’s not possible to legislate prosperity except for those elites who are in power, and the upper 10% that support their systems.
Cooperative solutions sound nice, but would you like to cooperate and support 15% or so of my payroll costs? I would not give you anything in return, naturally. I’ll accept cash.
And that’s the supporting point. Most commenters here talk about ideas similar to “cooperative” solutions. However not one will contribute to my payroll without receiving anything in return. Nor will they contribute or have responsibility for the results and costs of the ideas they advocate. One might look at Hugh’s post below and wonder at the cost, in both dollar and in freedom terms. I certainly apologize if I included you in that group with the last comment in my previous response. If not….
@bluntjob (somehow I can’t reply directly)
There is someone that can contribute to your payroll cost without expecting anything back : government (at least in a theoretical setting, not necessarily with current laws).
A good part of the payroll at our company is supported in high % by government subsidies for R&D (this is in Quebec though, of course US can have different laws). This money can only pay for salaries of employees, and it allows us to get/pay higher wage. You also have to apply for the money and show how you use it, etc., but it’s a way for the government to inject money in the economy directly as salary increase to allow us to pay living wage, and not minimum wage, and it helps to create wealth as it allows us to hire people to develop and improve our products. I think we had something like 50-60% of total payroll (of 9 full-time employees) payed through this program last year, which are not big salaries but decent to live on (40-60k ranges).
I know that the US is very reticent to have government do much of anything in general, but it’s the kind of program that can help increase wages. Not by passing a law that forces minimum wages to go up, but by paying a % of payroll for companies to allow them to give more. The money has to come from somewhere of course, but we do have a progressive tax system that gets a lot more out of the top earners than yours…
Patccmoi, you don’t have to give the name of your company or anything, but if you don’t mind me asking, what industry are you in? What you are saying sounds interesting, so I was just wondering.
Yes, Patccmoi, blunt, the problem is that there’s too little money at the bottom, so whatever is earned/paid, comes from the person next to us who also doesn’t have enough. That’s an unconscionable position. It’s simply unacceptable and yet here we are.
Cooperation starts with the recognition of this problem, followed by realizing that unless we work together on it, a better way will not be established–not for us or our children.
I have heard no adequate solutions via working within the status quo–the corruption has become too deep and broad. Yes, a set of laws surrounding minimum-wage hike could work. Particularly if set up with gov’t job programs and jubilees–it would break the structure up and allow us to find another direction. But how do we get that to happen? Obomney and cohorts? lol
We-the-people need to confront the power-mongers while finding ways to “set up shop” outside the status quo. In this blog and others, lots of ideas are proposed. We must learn to think outside the box. We need the practice!
So far, too few of us accept that we ourselves have to force/grow change. We are already overworked with not-enough, so who can blame us? Yet there is nothing else for it.
But you’re right, bluntjob, neither the proposals presented nor the idea of cooperation will do a thing for your immediate concerns, just as keeping the minimum wage at $9, (as also raising it to a whopping $10), does nothing for those who need to live on it. So we continue to compete.
Good luck–it’s the only way to manage until we decide.
@Me
We’re in informatics. Mostly small business management/accounting/sales softwares, transactional websites and formation.
Since the solution we’re offering small businesses (and actually being used by some municipalities around too) is pretty new in terms of functionality, and that we are adding to it to fill different needs and apply it to different problems, we can claim R&D money for it, and that’s how we can manage to hire people and pay them a decent salary. We’re far from a big money-making company, but we service a lot of the businesses in our community at a far better price than what they would get by having to buy big commercial management/accounting softwares and pay the corporate licenses to use them. So hopefully we help them pay people better too…
But this is why I think the role of government here is very important. By taking some of our payroll costs off, they allow us to sell our products and services at a significantly lower price and still be viable, and this way people buying them also have reduced cost and can pay better salaries/do other useful investments that will increase their productivity and over time you grow the local economy. It’s the kind of government intervention that can greatly help a community without being a significant investment compared to the returns..
Everyone I know who owns a business wants to keep it, and doesn’t want to sell it. I know several people who didn’t own a business, who have started one. Before they started their own business, they were employed.
From this I conclude that the sob story that business owners tell is nothing but that. No one held a gun to their head and forced them, and no one is holding a gun to their head now. They own a business because owning is more lucrative than working for an owner, and employing is more lucrative than being employed.
Hmmm, i can see why you are concerned – if we had a living wage, maybe one of the parents could stay home and actually care for their own kids ….
If these are kids of single parents – what we need is subsidized child care ….
Here’s the irony – Is the wage you are paying enough for your employees to support themselves or is this a “second job” they need to stay afloat because they or their spouses don’t make a living wage? Or are they on social services as well …
Aquifer,
I do agree, it would be ideal for 1 parent to work and one to stay home. That’s the bargain I made with my wife.
However, the state subsidizes child care here in Washington, and they pay a between $200 and $400 a month. That’s 25% to 50% of our current rates, so naturally we don’t take state pay. Also, if you do take state pay, add another 3/4 of an inch of regulations to a stack 1 1/2 inches high.
As for the nature of the jobs, we have 2 for which it’s a summer job, 1 that’s retired, 2 that are single, and 2 that are second earners.
None are on social services that I know of.
If I was to pay a “living wage”, a number thats about $20 per hour around here, my cost per child would be around $1800, as we’re hard capped on total children.
There are a great many things that affect the cost to exist these days, and I can’t cover them here. Please consider this as a small example of a small employer with no real profit, just a small wage and a tax deduction to show for employing 7 people and all the effort and work that takes.
Remember, increasing minimum wages is a play that enriches the balance sheets of the elites and large employers, and destroys needed competition from small business.
Yah, a basic living wage is $20/hr–that’s my conclusion, too. From this perspective, Auerback’s lengthy careful explanation about $10/hr is way behind the eight-ball.
You employ people only when they don’t need a living wage, or are single/healthy and not planning on any change. What percentage of US workers people are in your workers’ situation? What shall we do about all the others–those who need a living wage? That is the real question.
And that question includes your wife, the struggling small business owner.
You know, I fully agree that a minimum living wage around 20$/hour makes sense.
But I don’t think that you can achieve the results you want by modifying the law regarding minimum wage. I mean, by all means the minimum wage should at least follow inflation, for sure. But increasing the minimum wage to say 20$/hour would just create massive inflation that would be bad for nearly everyone, INCLUDING the poor that just got their wage increased.
I’m not sure what the good solution is. I’m 100% for allowing salary for the masses, and especially those at the bottom, to be closer to a living wage, I just don’t think that simply “raising minimum wage” is the good lever to pull to achieve that result. Maybe it could work in conjunctions with some other laws that would be pretty drastic, but I think that as a whole what we have to look at is reworking the system.
The situation that bluntobj described is very real, I saw it first hand where small employers are just scrapping by and could simply not afford to pay their employees more than they do, not because they’re pocketing profits, sometimes they have 0 profit all they want to do is work, provide a service, employ people and get to the next month!
The main problem I see with minimum wages being too low is companies like Wal-Mart that are huge employers, pocket TONS of profits and keep paying employees below living wage. But if you just give them a mandatory minimum wage increase, they’ll just manage to keep the same profit (actually likely higher nominal profits) in a different way.
So yes, the problem does have to be tackled. Maybe some other laws could be set in place (maybe minimum salary should be modulated for a company based on its profits? I dunno, I didn’t take time to think of what the impacts of this truly would be). I just don’t think that this particular solution is a good one. Not on its own anyway.
Yes, bluntobj’s situation is certainly real. Did I not agree clearly enough? “..we have to look at…reworking the system”. Yes. And thanks for Canadian perspective.
Maybe we US’ers could sign work contracts that include a commitment to 8 hours a week to our citizen-job: protesting in the streets. Lol but seriously
And when on the streets, we could hand out a large variety of well-thought-out-proposals in pamphlets. Proposals for how to create an environment that would give us living wages for honest work. Clear pamphlets on any of these issues:
–various ideas for combinations of laws, work-projects, jubilees that could be instituted by a non-corrupt gov’t
–proposals to clean up our corrupted gov’t and other systems: financial, health care, small business, corporate/global business, judicial/prisons, military, energy, infrastructure, media
–re-structuring the system itself: socialist-approach, anarchist-approach, social democratic-approach, revisions of democratic and capitalist-approach
–Include pamphlets on ideas-in-practice such as Mondragon
–include proposals on how to care for those who cannot work. If proposal to keep the system, then how to use most effectively: Social Security, Medicare/Medicaid, WIC, Section 8, unemployment, etc.
Five million of us on the street, in rolling waves for months at a time, along with a boatload of concrete proposals left fluttering behind us and in every café/bar. That would create change, yep. Maybe not the kind of change we want, at first, given the militarized police, but eventually.
Pat,
I think some of the costs of a “livable wage” would be passed through to customers. And it would push up the wages of other marginal paying jobs as well.
But, stop and consider the micro-economic perspective. For many employers with excess capacity, such cost increases can be covered by volume. What I mean is, if you have a large affluent working class you have a lot of paying customers, therefore you sell more product and can cover your costs through volume. Factor this up the supply and retail chains across industries all over the country, and you are talking about a considerable boost to the economy.
America worked best when they had a well paid middle-class.
Great discussion, gang.
I live here in NW Washington, too. $20/hour is about right. It’s $18.16/hour just to afford a 2-br apt, according to the National Low Income Housing Coalition’s 2012 report, Out of Reach.
I’m in the process of applying for a job that will pay a living wage for the first time in 5 years: painting custom houses on San Juan Island, notorious for the state’s greatest gap between incomes and housing prices.
Here where I presently live, you’re lucky to get anything over 8, including my former job as a dementia care-certified nusring assistant. People will pay me more to mow their lawn or paint their house than they will to take care of their dearly demented loved ones. WTFIUWT?
Remember, increasing minimum wages is a play that enriches the balance sheets of the elites and large employers
It’s lucky for us all that bluntobj has controlled the government for the last thirty years and has kept the minumum wage down. Imagine if elites and large employers had had significant imfluence. They’d have raised the minimum wage and enriched themselves!
They did.
Didn’t you get the memo?
I am not sure what the point of this proposal is. We live in a kleptocracy so our kleptocratic ruling class is not going to be interested in raising the minimum wage in any meaningful way. On the other hand, it doesn’t address what ordinary Americans need. Quite simply, they need a lot more than a bump up in the minimum wage.
We need, for example, a jobs guarantee with the government being the employer of first resort with jobs that pay a living wage. We need the end of free trade treaties and outsourcing. Jobs should, whenever possible, be kept here at home. We need Medicare for All, free fully funded education at all levels through university, secure pensions, and affordable housing. We need government that isn’t corrupt and serves us and not the rich.
We have many needs and many potential jobs to meet them in education, healthcare, and caring for the elderly, in rebuilding our communities, industrial base, and infrastructure and doing all this in a sustainable way.
Minimum wage is part of the same politico-economic system that created the current mess. Increasing it is a reform in an unreformable and thoroughly criminal system. Besides being a kind of thought experiment, I do not see the point.
I heartily agree that we need all the things you say. How we get there from here is the problem.
In this I’m reminded of Steve Keen in a video of his about the Modern Jubilee (can’t find it right now), in which he says something like, no, the MJ won’t solve all our problems, it’s intended as a remedial step in the right direction, with much more to do afterwards.
I would add a 6th top reason: Exercises atrophied political muscles.
I am afraid that Jubliee idea is a distraction…it somehow delays or relieves the pressure for clawback from the 0.01%.
It might be worth considering if we can’t get enough back. But it should not be at the forefront.
Hugh,
I’m sorry, i can’t resist – you sound so much like a Green :)
Forget wages altogether. Everybody get a fully funded, say $5000 a month debit card, “work” then becomes voluntary.
Cherokee Nation bumbababa Cherokee Tribe whoahaoaoa Too Proud to Live dunanana Too Proud to Die whahahahaha
Anybody remember Paul Revere and the Raiders?
This is 8-track tape land kids. It came out on a 45. This is like Bing Crosby was to me. Holy Cow that’s a long time.
What’s a minimum wage when you lived in Cherokee Nation? You had the forest and the river and the sky. You had the crops and the rain and the deer. You had the big sweat lodge and the tee pees. You had everything and no wage at all.
What is a minimum wage? It’s a promise of something, some fraction, of what every Cherokee had in infinite amount. But only a fraction, and only if you run after it until you nearly drop from breathless exhaustion locked in a “competition” you cannot even intuit in its full floor-escense, much less analyze and define, clearly, and without loss of meaning. How could you, unless you really spaced out?
How’s that for a good deal? Why the jump from the Cherokee to Charity, or even to Cher herself? Wasn’t she a part Cherokee. It gets complicated, at first, and then it all just goes “ohhhh, that’s it” when you see it. And then you know. Nobody knows what money is. Nobody.
You mean this one? http://www.youtube.com/watch?v=fGtlXzsg59U
You make a critical point. Traditional societies believe in an organic, living environment; we’ve reduced ours to a mechanism, in effect, killing the universe and everything in it, including us. It’s so much easier to exploit resources that way.
I’m a big science enthusiast. But we’ve got a major problem with our fundamental assumption of the world as “nothing but” a mechanism. Mechanisms, including us voting-machines on two legs, have no human rights.
Acknowledging that we’re organisms, all inextricably interdependent, doesn’t mean one has to reject science. Far from it, science confirms the organic view in, eg, the principle of universal common descent.
http://youtu.be/G0UGpcea8Zg
Once enough of us acknowledge our inalienable kinship with each other, I expect thinks to get better. But I’m not holding my breath.
We are all organism.
This weekend, I was at a farmer’s market and at the entrance, there was a sign, ‘No animals, no bikes, no smoking.’
I thought, ‘what are all those human animals doing in there, not to mention dead animal-animals?’
I went in anyway, joining all those authority-disrespecting anarchist grocery human-animal shoppers.
Organisms.
I was thinking about something else.
Craazyman’s is the ideal long term…non-ownership sharing the forest, the river, the sky…
,
Short term, I think minimum wage is the wrong one to focus on.
I think we should have a maximum wealth…it should be set to respect to a personal livable wealth, but not luxury-living wealth.
Mr. JPMorganChase chairman, we believe you have reach the maximum wealth limit, please turn over the office to another person and who knows, maybe things might get better under him/her, i.e. the new guy/gal, because it can’t any worse at JPMorganChase.
So, we take all the money above the maximum wealth limit from all our billionaires and ‘reparate’ to all those making less than $250,000.
And then we take all those trillions stashed away in some foreign tax havens and give them back to the taxpayers.
You won’t need ‘all the money you can print because we are a monetary sovereign’ and you don’t need any universal (but not if you are short of money for medical care) bailout.
This way, we actually address the gini index issue we are having trouble dealing with these days.
Check out what happened in American samoa after the federal government increased minimum wages there in 2007. It destroyed their key industry.
http://bluecravat.blogspot.com/2012/07/obama-to-repeal-minimum-wage-law-its.html
Marshall,
Seems that you believe businesses are making too much money, so your idea is to increase their costs, so they can hire more people, thus curing the real problem, unemployment.
Strange.
Rodger Malcolm Mitchell
Businesses don’t hire workers because of low costs, they hire them because of the prospect of revenue. Businesses don’t lay off workers because of high costs, they fire them because the prospect of revenue disappears.
The day after the stock market crashed, taxes, wages and every other cost was the same as it had been the day before. Yet businesses that had been happy to hire started laying off.
There is no evidence that businesses ever stop hiring labor because of wages. Because, hint, people with money in their pockets spend it on goods and services that businesses provide.
BS. Raising the minimum wage only raises the prices for consumers. Any benefit is offset by higher prices. People actually have less to spend. The only one to benefit from an increase in the minimum wage is the government. Higher prices mean more sales tax revenue. It’s a sneaky way to get more revenue for government.