Minimum Wage, Justice and Economics

It would be easy to sign a petition stating in the strongest terms that you support the idea that all minimum wage workers should be able to make a living.  I want that and at the same time, when employers say that the market value of their minimum wage workers’ labor is not even minimum wage, I believe them.  Any minimum wage worker who quits or is fired for cause can be replaced in an afternoon.  I can accept that as a fact. 

With little persuasion, I think I can accept that raising minimum wage to a living wage would cause more problems than it solves.  What would that be, any way;  doubling it as the hapless McDonalds workers in New York are demanding?  Working minimum wage full-time equals about $15000 a year.  So, OK, yeah, doubling it.

There are plenty of arguments in favor of it, simple justice being one of them.  Robert Reich points out that McDonalds’ CEO made 800 times what a McDonalds worker makes and Walmart’s CEO makes 1000 times what a Walmart worker makes.  Even a comfortably vested shareholder should have trouble with those numbers.  That comes out of the company’s earnings with commensurately less flow-through to the stockholders in the form of dividends or capital gains.  At 13.8 to 20.7 million dollars a year, respectively, each of those guys must be really, really smart and very good managers.

Paul Krugman points out that minimum wage has not kept up with inflation. In real (inflation adjusted) terms it should be above $10/hour.  Furthermore, in that time, worker productivity has doubled.  Fairness says it’s time for a raise.

I don’t shed a lot of tears for corporations and CEOs.  But if we are talking about fairness, I don’t think we should force employers to swim upstream through the raging rapids of ineluctable market forces.  It is not their personal or collective responsibility to guarantee a living wage to individual employees.  Then whose is it?  Oh-h-h, now we are treading on thin ice – smells like Socialism! 

Low wage workers, like all workers, need to pay bills, raise their kids, protect their health, all of that.  The Earned Income Tax Credit – basically a taxpayer subsidy of low wage workers - is one fair and equitable vehicle toward achieving that goal.  And I’m piling onto the bandwagon with Reich who also adds childcare, good schools, health insurance, and union rights.