We’ve all heard the expression “reasonable minds can disagree”. I actually think that’s true less often than is commonly supposed, although reasonable minds can disagree on that.
One issue that fails the “reasonable minds” test for me is raising the minimum wage. I say this because both factually and philosophically I find the arguments against raising the wage so utterly lacking in merit, that the minds which conjured them are less likely to be “reasonable” and more likely to be the result of blunt head trauma, or at least morally indifferent self-interest, which may or may not be induced by repeated contact between one’s cranium and an iron mallet.
First, let’s just very quickly review the benefits of raising the minimum wage, and then we’ll deal with the counter-arguments.
Under the current federal minimum wage has been $7.25 per hour since 2009 (containing many exceptions, including an obscene $2.13 federal minimum wage for workers who theoretically get tips). This is the longest period in history without an increase in the minimum wage.There is no area of the country where two parents earning that wage and raising two children can come close to buying the basic necessities of life, including food, housing, transportation, child care, health care, etc.
Raising the wage to $15 would immediately give a raise to more than 17 million people and lift millions of people out of poverty. It would reduce crime, obesity, depression, suicides and domestic violence.
Take suicide: There is a direct correlation between suicide rates and economic status. The less you make, the more likely you are to kill yourself for the obvious reasons of increased daily pressure, inability to develop reasonable support mechanisms, and ingrained hopelessness. CNN recently reported a study showing that almost 30,000 suicides could have been prevented between 2009 and 2015 if the minimum wage was a mere $2 per hour higher,
I could go on and on about the benefits of a higher wage (or pretty much anything. It explains why I’m not invited to parties very often). But let’s get to the good stuff. What are the arguments against a federally mandated livable wage. I would start with the best argument and work to the worst. But they are all pretty crappy. So I’ll take them in random order:
= SMALL BUSINESS CAN’T AFFORD IT — This one makes my head explode. And if that happened, I might think this argument is reasonable. But it’s not. Let’s look at this one conceptually.
If you wanted to open a restaurant, you would be required to buy a few things, such as a large, restaurant-grade walk-in freezer. I don’t know how much they actually cost. Nobody on my Christmas list asked for one. So I’m going to make up the numbers. We’ll say that the freezer costs $20,000. You can’t go to General Electric and say “I’m sorry. I know you need to charge $20,000 for this freezer to pay your workers and your other operating costs, plus make a profit. But this freezer only cost $10,000 in 2009, and that’s all my business model allots for me to pay.”.
GE will tell you to get lost. You have to pay them what they need to survive economically in 2021. The same is true with the company that sells you your stove, or your tables or your electricity. It is only with human beings that we are indifferent to what THEY need to survive. We tell workers “We don’t care that health insurance, food, gas, day care, etc, have all become dramatically more expensive since 2009, we want to keep paying you 2009 wages so we can make more money”. This is unacceptable for any other business expense you may have, and it is equally unacceptable when it comes to your workers.
= LARGE BUSINESS CAN’T AFFORD IT — This argument doesn’t make my head explode exactly. It’s more like a slow oozing of the cerebellum out of my ears. But still, visually stunning. I’ve debated people who opposed ANY increase to the minimum wage whose own “compensation packages” (if you make a LOT of money, that’s what they call it) have gone through the roof. The greed, moral obtuseness and hypocrisy of this is simply breathtaking.
In 1975, the average CEO made about 35 times what their average worker made. And CEOs should make more as compensation escalates with increased responsibility. But by 2018, the average disparity shot up from 35–1 to over 300–1. The average CEO now makes $9,000 per hour, which has more than doubled in the time that the minimum has not gone up a dime. Other executive compensation is less, but still obscenely high when compared to workers.
Just this week I posted about a CEO who opposes a national $15 minimum wage while his compensation is over $22 Million per year. Do you think he shares his worker’s anxiety over how they will afford to buy their kids Christmas presents? Having trouble finding money to pay your workers more? Maybe shave a few million off of this year’s bonus for yourself.
= INCREASING THE MINIMUM WAGE RAISES PRICES, SO IT’S A WASH. — This one is just factually false. First, even if there was some bump in inflation, it would not be “a wash”. Labor costs as a percentage of a company’s total costs of doing business vary widely. But they are clearly under 100% (usually closer to 50–60%). Further, labor costs include. not only wages, but health care and other benefits, payroll costs, taxes, insurance, etc. The percentage of costs represented by wages alone, which is the only labor cost affected by an increase in the minimum wage, is usually under 30% of a company’s total expenses.
Further, not all wages will be affected by an increase in the minimum wage. Most companies have at least some workers who already make more than $15 and whose compensation will be minimally affected, or not at all. So for these reasons, plus others such as competitive pressure on pricing, a minimum wage increase is likely to have only a marginal impact on prices. And of course, we don’t have to guess about this. It is knowable. The picture above is a chart correlating the inflation rate with the minimum wage since it was first enacted in1935, through 2018. You can see there is very little discernible relationship between the two.
And for those who worry that any increase in prices will affect them personally, I refer you to a quote from my second-favorite Republican President, Benjamin Harrison (hey, the pickings are slim). “I pity the man who wants a coat so cheap that the man or woman who produces the cloth will starve in the process”. This quote was obviously uttered before Newt Gingrich decreed that all expressions of humanity were Communist.
= RAISING THE WAGE COSTS JOBS — Historically, raising the minimum wage has a negligible effect on employment rates. Further some new jobs are created as demand increases for products people who get a raise from $7.25 to $15 per hour buy, like new shoes, or high chairs. Further, most employers don’t keep a bunch of workers they don’t need on the payroll, only to fire then in a fit of pique of the wage goes up. They hire the workers they need. No more, no less.
But to be fair the number of jobs lost if the minimum wage goes up is not zero. Some businesses will have to let some people go. But I am going to make a bold statement: If your business model involves paying your workers starvation wages, you have a failed business model, Further, we don’t want your jobs. Your jobs don’t benefit your workers who are forced to live far below the poverty level. Jobs that only benefit the “job-creators” without providing a decent life for the actual “job-doers” are not the kind of jobs we want the policies we create to encourage.
In our affluent society, people who work full-time at the very hard tasks that most minimum wage, or near-minimum wage jobs are (Ever clean toilets? How about changing the sheets in hotels? Try it sometime) should not have to live in poverty.
Even if you are a conservative, you should support raising the minimum wage to $15. Recently McDonalds was called out for posting on their employee web page, tips for getting on food stamps and other government programs. Shouldn’t McDonalds pay its workers enough so that they can support themselves? Are you OK with a rich corporation outsourcing the paying of it’s workers to the taxpayers?
Every day that the wage is not raised is a moral obscenity. And we have enough of those in our society just now.