Wednesday, August 21, 2013

Why We Should Raise the Minimum Wage

  From the very start the minimum wage has been a politically contentious idea.  Republicans have always opposed the concept from the very start on Libertarian grounds that an employer should have the freedom to pay a worker anything he can if the worker will accept that wage.  Democrats take a more utilitarian view of the minimum wage, at least this Democrat does.  We tend to feel that a minimum wage that allows a worker to live above the poverty level provides the greatest good for the greatest number of people and is beneficial for the economic well being of our country.
   The minimum wage is a relatively recent development in history.  The first country to adopt it was New Zealand in 1894 and were enforced by compulsory arbitration.  In 1896 some states in Australia passed a minimum wage law for selected industries where the pay was considered to be too low.  After looking at their minimum wage laws on March 24, 1909 young Winston Churchill introduced the Trade Board Act and it went into effect in January, 1910.
   Even though Churchill was a conservative Tory his rational in support of a minimum wage was brilliant.  “It is a national evil that any class of Her Majesty’s subjects should receive less than a living wage in return for their utmost exertions … where you have what you call sweated trades, you have no organization, no parity of bargaining, the good employer is undercut by the bad and the bad by the worst.  The worker whose whole livelihood depends upon the industry, is undersold by the worker who only takes up the trade as a second string.  Where those conditions prevail you have not a condition of progress, but a condition of progressive degeneration.”
   Most of Europe either has a minimum wage or there are arbitration boards, unions and employer groups that work together to see that pay is not too low and to avoid strikes.
   It wasn’t until 1938 when Franklin Roosevelt and the Democrats enacted a national minimum wage law to help bring working families out of poverty so they would have money to spend to stimulate a destitute economy.  In the 1960’s as part of the Alliance for Progress many Latin American countries adopted minimum wage laws, however since they were too low they did little to move the working poor into the middle class.
   Ezra Klein published a graph on the internet that tracks labor’s share of income and corporate profits since 1970.  It clearly shows that labor’s share of the money has gone down slightly while corporate profits have soared.  Even though there was a sharp down in corporate profits during George W. Bush’s first term and the economy nearly collapsing late in his second term corporate profits have exceeded what labor makes for the first time.
   In President Obama’s 2013 State of the Union Address he said “We gather here knowing that there are millions of Americans whose hard work and dedication have not been rewarded.  Our economy is adding jobs - but too many people still can’t find full-time employment.”
   Yet, this situation seems fine to Republicans who complain about high unemployment but refuse to compromise with the President to pass a jobs bill.  George W. did sign an increase in the minimum wage, not out of conviction but out of political expediency.  He didn’t want his party to lose seats in the next election.
   Republicans trot out the same arguments every time we have this debate about the minimum wage.  Their first one is always that its going to cost jobs, as if they actually care about the working poor.  It might really cost a few low wage jobs temporarily but the figures tent to show that the improvement in business growth due to more people getting out of debt and having money to spend eventually creates more good paying jobs.  The minimum wage has been raised 17 times and 14 times in the following year GDP has grown.  Of those three times it didn’t  there were other contributing factors such as the Arab Oil Embargo.  Ignoring the strong correlation between higher wages for the working poor and economic growth Republicans never make this point.
   Another argument is that companies will move their operations overseas where labor is cheaper.  Yes, they have been doing that sort of outsourcing for a long time now and the result of those actions has been to hurt the quality of life here while exploiting people in others countries.  Republicans idealize corporations as the engines of employment, but when they choose the bottom line as their only goal their priorities become paying employees as little in possible in wages and benefits. There is nothing to admire in a company that doesn’t strive for the common good.  Fortunately this is not true of all corporations since many are run by human beings with a conscience.  Far too many companies pay no tax at all. We should find ways to penalize companies that try to game the system and limit the political power that gives them unfair and undeserved advantages.
   Their other argument against allowing an increase in the minimum wage is a rather specious one; in that it raises the cost of goods we buy.  This is the WalMart argument that low prices are great even when they drive people into poverty, where they have to live on food stamps and end up in the emergence room because they don’t have health insurance.  It’s the high cost of low prices.  Maybe I’m an old softy but I think paying just a little bit more is worth it if an American family can survive on a paycheck.
   Here are some reasons why a raise in the minimum wage is good.  People earning minimum wage have very little bargaining power to get a raise from their employer.  Out of simply fairness the government needs, from time to time, step in and adjust the minimum wage for inflation.
   We could reduce the number of people on food stamps, not by just cutting them off like Republicans want to do, but because many would no longer need them. Communities would be stronger and people would be less likely to resort to crime.  We have the highest incarceration rate in the world with 5% of the world’s population and we have 25% of the world’s prisoners.
   If you look at the states with no minimum wage you see a lot of poor southern red states like Alabama, Mississippi, Louisiana and South Carolina with no minimum wage and Georgia with the lowest at $5.15.  These are the states where poverty is severe and would benefit most.  About 28 million Americans would get a pay raise and improve their quality of life and that of their families.  Women and children would be the primary beneficiaries of a raise in the minimum wage.  With the gap between the top 1% and the bottom 80% continually widening we need to urgently address this problem or our social fabric will continue to disintegrate.  Raising the minimum wage is a good start, but America was much fairer and more equal when the top tax rates were much higher.  It is past time for our party to stand up and insist that we stop robbing the poor to give to the rich.
   If there is a California ballot initiative to raise the minimum wage, and there very likely will be, I will vote for it.

       Dave Silva

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