Class Warfare Blog

May 20, 2017

An Argument for a Minimum Wage

There have been myriad studies about the impact of having a minimum wage. Some indicate that there is no particularly strong linkage between creating a higher wage for low wage workers and some indicate that a rise in the min wage causes unemployment.

The politicians arguing against a min wage use a very simplified argument: namely that if employers have to pay their workers more, they will only be able to hire so many workers, mostly fewer. This is way too simple in thinking this. For one, if people are paid more money, they then spend more money (what goes around, comes around) which is good for business. There are many more facets to this issue.

If labor costs go up, and they have myriad times due to labor contracts, etc. how, oh how, do companies cope? (Yes, I am being sarcastic.) The amount of money that goes to labor in any company is not a fixed amount or even a fixed percentage of the company’s budget. There are many, many ways that those increased labor costs can be offset. For one, you can raise prices for the goods created. You could decrease profits. You could find other ways to reduce operating costs (reduce energy costs by going solar, etc.).

Knee jerk responses to these actions abound, of course. “If we raise prices, we will reduce sales!” Really? Companies never raise prices, then? C’mon, get real. Just raising prices alone, of course, is the lazy way to deal with increased labor costs; a combination of actions would be better.

Most of these minimum wage discussions are shallow and politically motivated. Basically, the opponents of min wage increases give minimal arguments and only add to them if we don’t accept (aka we reject vehemently) their overly simplistic argument.

Let me explain a real reason for min wage increases. Minimum wage increases are justified for the simple reason is that business interests (aka the plutocrats) have conspired to suppress wages for a long, long time. This involves bribing politicians to undermine union powers and privileges, delaying minimum wage increases, changing the laws in favor of employers over employees, etc. They have been particularly effective over the past 40 years (see the chart below as to the effectiveness of wage suppression over the past 40 years). The only power source of ordinary people to oppose these powerful business interests is government. The cabal wants wages low (too low) and so government must set a floor on wages. It is not simple but at least that is the political dynamic.

If you want to see this playing out right now, consider the current stance of the GOP. The GOP has been the champion of local rights for a long time. Education, for example, should not be a federal issue, but should reside in the states, with the states deferring to local communities and their school boards. So, what has been the GOP response to cities who have enacted their own min wage increases? GOP dominated states are passing laws to roll back those democratically achieved minimum wage increases and to bar such local increases in the future. Local control doesn’t mean a fig when the GOP’s paymasters issue directives (You will keep wages down, or else).

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4 Comments »

  1. it’s also scary to see employers invest in technology that replaces human labor. This too seems counter productive however because when fewer people are working making a decent wage then there is no demand for the products this new technology creates. But the business model for most never really sees much beyond their profit margins for the next quarter or two.

    Like

    Comment by lbwoodgate — May 20, 2017 @ 9:33 pm | Reply

    • Scientific American ran a provocative article quite some time ago describing how “labor saving devices” don’t save labor, they merely transform it. The reason labor is not saved is that standards change. One example I remember is the invention of the electric vacuum machine (transformative technology of its time). Prior to its adoption people swept their floors, even the rugs from time to time. When the vacuum became popular, what passed for clean floors rose and people spent more time vacuuming that they did sweeping.

      The impact of technology is that it kills off your job and creates others. This affects you and the new hires in different ways. We still haven’t effectively address worker re-training or compensation when this “displacement” happens. I am not saying a janitor needs to be retrained in IT, but into something valuable in another job. We keep treating people (“workers”) as a commodity.

      On Sat, May 20, 2017 at 9:33 PM, Class Warfare Blog wrote:

      >

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      Comment by Steve Ruis — May 21, 2017 @ 8:08 am | Reply

  2. Would it be OK if I cross-posted this article to WriterBeat.com? I’ll be sure to give you complete credit as the author. There6 is no fee, I’m simply trying to add more content diversity for our community and I liked what you wrote. If “OK” please let me know via email.

    Autumn
    AutumnCote@WriterBeat.com

    Like

    Comment by Autumn Cote — May 22, 2017 @ 5:07 am | Reply

    • Feel free to repost any articles of mine (as mine, of course ;o).

      On Mon, May 22, 2017 at 5:07 AM, Class Warfare Blog wrote:

      >

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      Comment by Steve Ruis — May 22, 2017 @ 8:04 am | Reply


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