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.

How to deal with undocumented immigrants

How to deal with undocumented immigrants.

The debate over undocumented immigrants is fueled by economic self-interest of employers, by the fear held by low wage American workers of the economic competition from undocumented workers, by the interests of the undocumented immigrants themselves. Additional pressures come from those who fear that not enforcing existing laws against undocumented immigrants will promote disrespect of the law. Other participants in the debate are simply prejudiced against speakers of Spanish or other foreign languages, against foreigners or people with darker skin.

There are a range of businesses such as farms, cleaning and personal care, construction, and low-wage manufacturing that use extensive workforces of immigrants who often have no papers. These businesses would be willing to hire the same immigrants if they did have papers. They are not interested in the illegality of it but in maintaining the low wages they pay these workers. They support increasing temporary workers from south of the border.

Their view of the matter is agrees with that of undocumented immigrants and their supporters. Jobs in Mexico and Central America are very hard to come by. Coming into the US without papers is expensive, difficult, and more and more dangerous. But the immigrants keep coming, propelled by their misery at home.

On the other side are American workers who do low-wage work and fear that the undocumented workers who get paid even less will depress their already low wages. They oppose any extension of undocumented immigration or even of bringing in temporary immigrants who have few skills and work for next to nothing.

They are supported by the people who fear that not enforcing an existing laws, they think, will spread disrespect of existing law.

If we try to take sides in this controversy, we must choose between, on the one hand, businesses that pay deplorably low wages and some of the people they employ who are still better off working for very low wages than they were at home. On the other side are American workers fearful that their wages will be depressed by the competition from the undocumented and the champions of upholding existing laws and enforcing them.

That is a very difficult choice. Whatever choice one makes, a group of people who already suffer from unjust treatment are bound to suffer more.

The choice is made more difficult by the fact that no reliable reliable information is available. No one knows precisely how many undocumented workers there are in the US. No one knows precisely to what extent the jobs taken by the undocumented are not acceptable to American workers. There are no accurate numbers about the depressive effect on domestic wages by undocumented immigrants.
As a consequence it is not clear which group is more numerous—the undocumented seeking some sort of living in the US or the American workers threatened with even lower wages due to competition from the undocumented. It is impossible to decide reliably which choice will do the least damage to the least number of people.

In a previouis blog I gave some examples of the deleterious effects on Latin American countries of US business practices. A completely just solution would require a large-scale effort on the part of the United States to improve conditions in Latin America. A completely just solution word make a major effort to reverse the damage we have done to all these American countries.

Short of that we must 1. Raise the minimum wage to a level where it allows a family a decent standard of living and 2. Enforce minimum wage legislation for all people working in the US in order to put an end to the lowering of American workers wage's by the undocumented. To be sure, forcing employers to pay all workers, whether documented or not, a decent wage would remove much of the incentive for hiring the undocumented and thereby the incentive for people coming across the border without papers. If there is less work for foreign workers, we would not need militarized, high-tech interdiction at the border. We could save billions of dollars and put an end to businesses taking advantage of the poverty abroad by paying wages which Americans cannot live on.

There is an interesting analogy between the immigration problem and the war on drugs. The US government is unwilling to spend more money on reducing addiction in the country. Instead they are trying desperately to choke off the supply. But as long as the demand is as large as it is, drugs will be imported. Undocumented workers are similar; they will come as long as there is demand for them. The way to solve the problem is to lower the demand by raising wages.