Economics, USA

Minimum Wage: Living wages are the only wages

2016 brought minimum wage hikes to 14 states. These increases mean that more than half of U.S. states now have minimum wages that exceed the federal minimum of $7.25. Washington D.C. leads the pack with a minimum wage of $10.50. Not far behind are California and Massachusetts, each with minimum wages of $10. On a city level, Seattle made headlines last year by increasing its minimum wage to $15, and it appears that in 2016 New York City plans to follow suit.

All this has led to an increased national dialogue about the merits surrounding such minimum wage increases. Obviously they increase wages, but do they really help? If they help, do they help enough? Or do they actually do more harm than good?

The critics of higher minimum wages would answer the third question with a resounding “Yes.” Hard core capitalists correctly argue that minimum wages violate free market principles. By setting an artificial floor for the price of labor, they fail to obey the laws of supply and demand, interfering with the invisible hand’s ability to wave its economic wand. This means that employers are paying an inflated price for labor. If a potential worker is willing to work for $5 an hour, but the minimum wage demands that the employer pay $10, than that employer is essentially paying twice as much for that labor than what the free market says it is worth.

The cost of labor is not the only thing that becomes inflated as a result of minimum wages. Increased cost of labor means increased cost of whatever it is that that labor is producing. If a restaurant owner needs to increase the hourly wage of his or her workers, you better believe that the prices on the menu will be going up as well.

But while these criticisms are economically accurate, I still think that they ring hollow—hollow because they attempt to place the principles of capitalism and free-market economics above the quality of the human condition.

Minimum wages can kill jobs, but the jobs that they kill shouldn’t exist anyway. They shouldn’t exist because those jobs don’t pay living wages. A living wage is a wage that allows a full-time worker to obtain a normal standard of living. It provides the worker an ability to afford all the basic necessities, things like rent, bills, food, gas, medical care, etc. In other words, a living wage is something that allows a full-time worker the ability to live.

$7.25 is not a living wage. Working a 40-hour week at $7.25 an hour amounts to a pre-tax take-home of $290. That adds up to about $500 a paycheck, $1,000 a month, or just barely over $15,000 a year. Have fun making a decent living out of that. In the United States, those wages might be living in the sense that they’re enough to keep you alive, but you’re certainly not doing much living beyond that.

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Minimum wage increases often get cast as “bad for business,” but really they are only bad for bad businesses. If the success of a business and its ability to generate profits directly depends on its ability to exploit its workforce and pay them poverty-level wages, than that is not a good business model—that is not a business worth saving or protecting.

Furthermore, when businesses don’t pay their workers living wages, you know who makes up the difference between what those workers need and what those workers are able to afford? We do. Workers who don’t receive healthcare from their employers and can’t afford their own plan are much more likely to need and qualify for a taxpayer-funded plan from the government. Workers that can’t afford to make rent, to pay bills, or to put food on the table, are much more likely to receive and qualify for taxpayer funded government assistance in order to do so. But if the government just passes a law that makes the minimum wage a living wage, the onerous flips from the government to the employers, saving the government, and its taxpayers, a lot of money.

But if minimum wages work so well, why stop at $10 or $15? Why not make it $50 or $100 or $100,000? This ridiculous question is always mockingly proposed by some free-market fuckface looking to score a few condescending chuckles from his or her conservative counterparts.  It’s also a question with an easy rebuttal, as Jon Stewart so eloquently demonstrated back when he was hosting the Daily Show:

“The reason you don’t raise the minimum wage to $100,000 an hour,” says Stewart with a sigh, “is because it would be unreasonable, economically, for someone working the drive-thru to make $4 million a week…But I feel like there might be a reasonable place in between the $290 a week they make now, and the $4 million a week you suggest.” (Click here for links to the highly-recommended full segment)

That reasonable place to which Stewart refers is the living wage, a wage that allows full-time working people a reasonable degree of comfort and security. I don’t know if that wage is $15, I don’t know that a magic number really exists, but I do know that $7.25 doesn’t seem to be cutting it for most people. And even though $15 an hour may seem pretty high for a minimum, what does that really buy you? That’s barely over $30,000 a year, which is certainly living, but hardly living it up.

One argument I’ve yet to address which has some validity is the negative effects a high minimum wage could have on small businesses, particularly those just starting out. I think most living wage advocates would agree that certain small businesses should be able to play by a slightly different set of rules, that perhaps the size of your company and the amount of profits it generates are factors worthy of consideration in determining the minimum salary a company needs to pay its employees. That being said, when we talk about inadequate minimum wages, small businesses are normally not the problem.

According to the National Employment Law Project, 66% of low-wage employers in 2011 were not small business owners, but large corporations that employed more than 100 workers. These companies, companies like Wal-mart, McDonald’s, and other food service industries, generate enormous profits while paying millions of employees poverty-level wages. The suggestion that these companies can’t afford higher pay for their employees is especially insulting when considering how much they pay the people running the show. In 2011, McDonald’s CEO James Skinner made $8.75 million. Assuming that he works 40 hours a week, that would amount to $4,200 an hour, 580 times more than the average McDonald’s worker. At that salary, James Skinner makes twice as much in one day than most of his full-time employees make in an entire year.

And that is what the minimum wage conversation should be about. Not its non-existent agenda to destroy the American economy or its efforts to provide lazy people with government handouts, but its ability to help address the widening gap between the haves and have-nots in this country—about knocking down the richest among us a peg or two in order to lift up the working poor.

An anti-minimum wage group out of NYC recently purchased some billboard space in the heart of Times Square. Their ad shows a young, white male in basic-bro attire taking a break between jams to incredulously asking the following: “What? I get $30,000 a year with no experience or skills? Who needs an education or hard work when Gov. Cuomo is raising the minimum wage to $15 an hour?” The young man has obviously been cast to portray the stoned, slacker, teet-suckling sector of society that will supposedly benefit from this purportedly senseless piece of legislation.

But despite the billboards’ mocking tone, the answers to its questions are less than obvious. The billboard suggests that someone without “experience or skills” does not deserve $30,000 a year, but why not? Why shouldn’t a full-time worker who shows up to work everyday and has maintained the same employer for a full 12 months be entitled to $30,000 over the course of that year? Isn’t this the attitude we want from “low-skilled,” “undereducated” workers—an attitude to work hard, excel, and contribute despite their lack of opportunities or advantages? These aren’t even the homeless, jobless, welfare queens that people usually bitch about. These are FULL-TIME WORKERS!

Also, the idea that such wage increases will deprive most people of the motivation to go to school, work hard, and better themselves is absolutely ludicrous. $30,000 a year is not a lot of money, especially when you are living in New York-Fucking-City. Making $30,000 just to work at a downtown KFC and live in Brooklyn’s shittiest apartment complex is hardly the endgame for most people. What is more, if you show up to work and don’t work hard, whether you’re a financial advisor or a fry-cook, you’re going to get fired.

What exactly is this billboard trying to say? “Yeah they work 40 hours a week, but do they really deserve to make a living off of that work? I mean, they have no experience, no education, and no skills. Fuck them, right?” No, billboard-makers, fuck you. Fuck you for the suggestion that some people in your imagined occupational hierarchy do not deserve life’s most basic comforts.

But can you really blame the group behind this billboard? Anyone who can afford to buy billboard space in Times Square probably cannot relate all-that well to the daily problems confronted by the working poor. From them we can’t expect more, but for our workers we should.

Living wages are the only wages that we should tolerate for American workers, especially for the essential services the workers in question provide. These are the workers who allow us to get a hot meal in under five minutes without ever leaving our cars. These are the workers that allow us to get groceries and gas at any hour of the day. These are the workers that bring comfort and convenience to so many aspects of American life. Living wages will likely mean that those goods and services will go up a few bucks in price, that $5 footlongs may now cost $6, and that you may get a few less chicken nuggets for $1.49, but those are sacrifices that Americans, especially those at the top of the income brackets, should be willing to make. These are the workers that make our lives a little more easy, and for those who are full-time, who depend on these jobs to make a living, to pay rent and put food on the table and oftentimes raise a family, a living wage is the least we can do for them to hopefully make their lives a little less hard.

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One thought on “Minimum Wage: Living wages are the only wages

  1. Pingback: Your Brain has EARNED a Break, Pay Up. – Writing in Life and Learning

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