By Harold DeRienzo
This past Thursday thousands of low wage workers in 60 cities walked off their jobs demanding an increase in pay to $15/hour. Of course there will be recriminations from the right concerning how raising the minimum wage will kill jobs, hurt small businesses and hurt teenagers who join the fast food workforce as a stepping stone to higher paid careers. Most such arguments have been shown to be fallacious but they preserver since they fit a convenient and nostalgic sense of the way things should be for those far removed from having to survive, or knowing those trying to survive, on a little more than $13,000 a year. But what could be the potential upsides of an increase in the minimum wage?
For starters, raising the minimum wage by about $7 an hour could pump over $25 billion into the economy, since you could bet dollars to (Dunkin’) donuts that this money would not be hoarded but spent. How many additional jobs would that generate? And that is only looking at the 2.4 million employees in the fast food industry! Our social security system is in trouble, how much further would benefits extend with an additional $2 billion annual infusion of payroll taxes? And again, this is only the fast food industry. How many of the 40-50 million American citizens on food stamps would earn their way out of eligibility for this public subsidy ($31,000 from the $15 hourly pay demand is about 22% higher than the $25,400 eligibility ceiling for a family of three)? How much money would that save the taxpayer? And for those of us in the housing field, how much more rental subsidy money would be available if higher incomes allowed for higher shares of the rent coming from the tenant, as opposed to the taxpayer? If conservatives want government off their backs, raising the minimum wage is one way of doing this.
Other benefits?
What if the price of a burger goes up? First of all, more families could afford it, but the increased price of a burger, combined with a household head of a family of three not having to work 2700 hours a year (1828 is full time at 35 hours a week) just to achieve poverty level wages, could result in more home cooked meals and healthy lifestyles and perhaps having at least some leisure time. Healthier lifestyles could result is less obesity, less diabetes, and less public (taxpayer-funded) health expenses. What if low wages no longer subsidized other costs, such as trucking, which transports most of our food thousands of miles before it ends up on our plates? What if this leads to a preference for locally grown food, which could reinvigorate our local farming industry and all the supportive and ancillary services necessary to support a thriving, decentralized, ever urban, agricultural sector? And what if higher wages resulted in the need for less credit, credit that is borrowed by banks for next to nothing and loaned to struggling consumers for nearly 30% interest? What kind of enhanced quality of life would that result in for the average citizen, not to mention, the economy, by freeing it up for consumer purchases, educational expenses, charitable contributions, and the like? The money saved by those citizens on what amounts to unnecessary rent being paid to the lords of the economy (the banks) would lift demand and increase jobs.
Of course, there are downsides. Perhaps the CEOs of many corporate fast food chains will have to scale back a bit on compensation. Don Thompson, of McDonalds, as an example, might not be able to make over $13 million in annual compensation. Perhaps bank executives may have to scale back their compensation as well for having the very difficult job of engaging in legally sanctioned loan-sharking. And if banks were forced to really function as they should, then perhaps Jamie Diamond of JP Morgan Chase might have to learn to get along on less than the $21 million in annual compensation he currently enjoys. And what if the average worker begins to feel vested in the “American Dream” and begins to take his or her citizenship more seriously by becoming more involved in our so-called democratic system? This certainly could result in undermining the political choke-hold the corporate sector has on our political system and processes.
Raise the minimum wage to $15 an hour!
I want to start by saying that I agree wholeheartedly with the arguments made for an increase in the minimum wage. The U.S Federal Government has failed its citizens by not addressing the issue of economic inequality. This past legislative session in Albany, New York State raised the minimum wage in phases. The deal will raise the minimum wage to $8 per hour next year (2014). The wage will be raised again to $8.75 in 2015 and $9 by the start of 2016. During the negotiations in Albany, some Legislators especially those in the Assembly wanted to tie minimum wage to inflation. This is the answer to end the grueling process of raising the minimum wage every few years. A living wage should not be a political issue; it is a humanity crisis in this country. The process of tying inflation with minimum wage will help keep this issue out of the vacillating and often capricious hands of elected officials. The cost of living is not lowering anytime soon, and people have to live on a livable wage in order to survive, especially in a place like NYC.
Before Dr. King was assassinated he was working, with other religious leaders, on a “poor people’s campaign” within a broader economic agenda. The campaign went on without King, but was ultimately unsuccessful. Dr. King knew that Civil Rights meant nothing if minorities did not have a piece of the economic pie. For a brief moment Occupy Wall Street used similar tactics that Dr. King used: peaceful protest, and boycotting the big banks that put us in the financial mess in the first place. The reason why the Occupy Movement did not succeed was because there were no clear leaders to invite to the negotiation table and speak on behalf of the people involved. Instead, the media portrayed this movement as people just squatting in a park in lower Manhattan yelling at the big banks. In the beginning it seems like a great idea not to have leaders because of the egalitarian nature of the protest and the difficulty in identifying targets in order to “divide and conquer.” In the long run it was a huge mistake.
What are the next steps people can take to actually make raising the minimum wage to $15/hr a reality? How can “we, the people” convince Congress, corporations and small business owners that when people earn a livable wage; it not only helps them rise from poverty, but it helps businesses in the long run? When people are employed and well compensated for their work it is less likely they are going to commit a crime to feed themselves or their children. People live with a sense of dignity when they are working and not receiving public assistance. As a result it creates a productive society, and at the end of the day that is something that everyone should want.
Thanks for the very thoughtful comments, especially about tying minimum wages to inflation in the way that Social Security is adjusted. One thing I would add to the point you made about the Occupy movement is that it may not have succeeded in actual tangible change, but I believe it did raise consciousness and placed income inequality, economic opportunity, excessive debt burdens, and financial security on the public policy agenda. That has stimulated thoughtful discussion but also may have been a driving force behind the recent minimum wage protests at car wash and fast food businesses.