“Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.” — Adam Smith
“Since its inception in the Great Depression, a strong minimum wage has been recognized as a key labor market institution that, if effectively maintained, can provide the foundation for equitable and adequate pay for American workers. However, the failure to regularly and adequately raise the federal minimum wage over the past five decades is one of several policy failures that have denied a generation of American workers more significant improvement in their quality of life. In fact, the erosion of the minimum wage has left low-wage workers today earning significantly less than their counterparts 50 years ago.” — David Cooper
American workers need higher wages, wages which will allow them to support themselves and their families without the need of a second or even a third job.
They need more benefits. They need paid sick leave and vacation time.
In short, they need the benefits that can and should be offered by the richest nation in the world — just as they’re offered in other rich nations globally.
It’s a scandal that the United States cannot boast about its workers being treated in the most generous, compassionate, and fair way possible, a scandal that cannot be overstated.
The vast majority of economic growth over the past several decades has gone straight to the top, with workers, who contributed steadily increasing production, were left out to dry. Just take a look at the disparity between production and compensation since the late 1970s. All the while, CEO pay skyrocketed.
Yet we are told by politicians and pundits, most often of the conservative or “libertarian” variety, that raising the minimum wage would lead to mass job loss.
Businesses will collapse under the pressure of being compelled by law to pay their workers living wages, it is said, and therefore raising the minimum wage is bad for both workers and the economy.
We are told that workers must stop being lazy, expecting such an incredible luxury as a minimum wage, and that they must work longer hours if they want to feed their families — despite the fact that the American workforce works longer hours than that of any other industrialized nation; despite the fact that workers are burnt out and have little to show for their efforts.
Further, not only are we told that raising the minimum wage is a bad idea from a business and economic standpoint, some would have us believe that the very concept of a minimum wage should be done away with — Scott Walker, in one of the more recent episodes of Republicans Say the Darnedest Things, claimed that the minimum wage is a “lame idea.”
But, sticking with the typical trend of political punditry, the fear-mongering doesn’t match the evidence.
The Center for Economic and Policy Research carried out a detailed analysis of the data ranging back to the early 1990s, examining the effects of minimum wage hikes on employment. They found that,
The weight of that evidence points to little or no employment response to modest increases in the minimum wage.
More recent data has shown a different trend. Based on employment data from the Bureau of Labor Statistics, not only did minimum wage increases have little negative effect on employment, it actually had net positive effects on job growth.
Of the 13 states that increased their minimum wage in early 2014, all but one (New Jersey) are seeing employment gains.
Despite the above, it is justifiable to worry about rapid wage hikes, particularly for small businesses who don’t have the capital of a McDonald’s or a Walmart, as Sam Becker points out.
But there are many factors that work to balance out the potentially negative effects, such as small price increases (increases that would be smaller than you think), and the fact that workers will have more money to spend, allowing them to consume more goods, helping small businesses in the long run.
There is also the morale factor: Workers who are being paid decent wages will work harder and be more satisfied with their job, leading to a decline of costly employee turnover.
So, the individual workers certainly benefit, and businesses can benefit, but what about the economy at large?
Higher wages for workers means a more equitable distribution of wealth, which eventually means a stronger middle class and a stronger, more stable economy. As a recent IMF analysis observed, high rates of income inequality is associated with lower economic growth, so fighting for policies that put more wealth in the hands of the masses makes sense from a broad economic perspective.
It should, of course, come as no surprise that Big Business and their representatives would oppose any policy which empowers the working class, threatening the current order of worker insecurity and subordination.
They are not going to hand over the power and control they have won over the past several decades, so mass movements, both nationally and internationally, must force their compliance, as the “Fight for $15” movement has been doing quite successfully.
With New York now planning to raise the minimum wage to $15 an hour for fast food workers “over the next few years,” according to The New York Times, and with Seattle along with other cities and states in the process of doing so, as well, we can expect the fear-mongering about potential negative effects of wage hikes for underpaid and overworked employees to become even more frantic.
But the evidence, and popular support, is on our side.
As Economic Policy Institute’s David Cooper observes in an article titled, “Raising the Minimum Wage to $12 by 2020 Would Lift Wages for 35 Million American Workers“:
Since its inception in the Great Depression, a strong minimum wage has been recognized as a key labor market institution that, if effectively maintained, can provide the foundation for equitable and adequate pay for American workers…
Raising the federal minimum wage to $12 by 2020 would restore its value to a level that ensures full-time work is a means to escape poverty, and would provide tens of millions of America’s lowest-paid workers with a small yet long-overdue improvement in their standard of living.
This is worth fighting for.
Further, minimum wage hikes can be implemented intelligently, allowing small businesses with fewer employees more time to adjust, as Seattle has shown. It appears that New York is following a similar pattern.
Again: the fear-mongering should be expected, but it should also be acknowledged as a sign of progress. Those on the wrong side of history know they’re losing, so they’re going to kick and scream all the way to the finish line.