Out of the Woods

Minimum Wage

We have known for a long time that when WalMart hires a new employee, HR explains to him or her how to get food stamps and get on Medicaid, because what WalMart is going to pay this new employee will not be enough to buy food and health care for the new hire's family.

This year, we have learned that employees of fast food companies have the same problem.

Now comes this morning's newspaper and reports that, according to the University of California Labor Center, 31% of all bank tellers get paid so poorly that they cannot survive without help from the government. The government spends close to $900,000 to supplement the incomes of poorly paid bank tellers.

That's, of course, a bonanza for WalMart, Fast Food restaurants and the banks. The money that taxpayers—you and I—lay out to help families who do not earn enough to live, raises the profit of these private companies. Companies with low wage jobs are subsidized by the government. We call that welfare for the rich.

One more example of the blessings of the “free market place.”

With ever new disclosures about workers paid too poorly to be able to live without government assistance, we may well ask: How many underpaid workers are there in the US?

There are different answers to that. The Federal minimum wage stands at $7.25. If the minimum wage had kept pace with inflation, the percentage that prices have risen since the end of World War II, it would today stand at $10.74.ⁱ

If we accepted the Federal minimum wage of $7.25 as the standard, 46% of workers would be underpaid. If we accept $10.74 as the proper minimum wage, then 26% of the workforce—35 million Americans-- gets paid less than minimum wage.

That is pretty alarming. One full quarter of all Americans working get not paid enough to meet their essential needs of food, shelter, clothing, health-care and education for their children. That certainly suggests that our economic system is not functioning. The least we should be able to expect from the economy is to provide a decent living to everyone working. Our economy is not doing that.

But even more startling are the arguments offered against raising the minimum wage.

One of them claims that half the people earning less than the minimum wage are under 26. Being under 26 is then presented as high-school kids doing part-time work after school. But being under 26 means for many Americans that they are working, that they are in a stable relationship, and are having or expecting children.

But even if many of the low wage earners are kids, can we be proud of a country that underpays its young people? That does not seem to me a good strategy for bringing up a new generation of eager and responsible workers. A society must take care of bringing up a new generation to fill the jobs that need doing. If we teach our young people that working does not pay, we are liable to produce a generation of people who hate their work even before they join the full-time workforce.

Even more startling is the standard prediction, that if we raise the minimum wage, the economy would loose 300,000 jobs.

Opponents of raising the minimum wage, mostly ardent advocates for capitalism, are telling us that our economic system is not able to provide jobs that pay decently to all who want to work. We have a choice between having a quarter of the workforce underpaid or having a very high rate of unemployment – which in turn, of course, depresses wages.

Capitalism, as we practice it today, is great for the rich. It makes them a lot richer. But that capitalism is not good at all for more than a quarter of the American population. However hard they work, they will end up dependent on government handouts. They will find themselves looked down upon by everyone else and make them ashamed for not making an adequate living, even though, God knows, that is not their fault.

However much it may produce for the rich, an economic system that does not provide good and rewarding work for everyone is an unacceptable system. Capitalism, as we practice it today, is a failure.

Opponents of raising the minimum wage as much as admit that.