Wednesday, February 18, 2015
THE MINIMUM WAGE SHOULD BE LOWER
While Americans are divided on many issues, the idea of making the poor slightly less poor is a rare point of bipartisan consensus. From ultra-liberal San Francisco to deep-red Arkansas, lawmakers and voters have boosted state and local minimum wages in twenty states—through legislation, automatic adjustments or ballot measures—enabling local governments to jump ahead of the stagnant federal minimum wage. Yet this eminently popular measure still draws ideological detractors, who are now busy trying to whittle down the meagerest wages in their states in the name of “fairness.”
The death-by-a-thousand cuts approach recently took the form of a proposal by Representative Jim Bolin of South Dakota to roll back the newly raised minimum wage of $8.50 an hour, automatically adjusted for inflation. Bolin sought to excise the inflation provision to allow the wage to also decrease in case of deflation. The logic is that whether the economy prospers or declines, the wage floor should be a “two-way street.” So, if the economy spirals downward, it’s only fair that the poorest workers see their incomes shrink proportionally: why shouldn’t their boat sink at the same rate as everyone else’s?
Beyond the odd notion that economic fairness is promoted by deregulating basic standards of human decency, Bolin’s proposal suggests an insidious premise: that social protections should be chained to the volatility of the market economy. The idea of marketizing the minimum wage actually contradicts its purpose: the minimum is a floor you can’t fall below, not a ceiling that could collapse on you. Though state minimum-wage rates are too low to bring many people above poverty, they at least safeguard workers against exploitation in a competitive job market. The alternative is to allow a race to the bottom—a devastating pattern that has driven the ferocious wealth gap between richer and poorer nations in laissez-faire global manufacturing industries.
David Cooper of the Economic Policy Institute tells The Nation via e-mail, “Given that our economy is driven by consumer spending, the last thing we would want during a period of economic turmoil is more folks with less money to spend.“ And, he noted, “a larger moral/philosophical question that should be considered as well: should the lowest paid worker never have any change in their standard of living?… Imagine we had a revolution in production processes such that prices of staple goods fell considerably, should we legislate that the lowest-paid workers shouldn’t get to benefit from those improvements?”
Although lawmakers complain that minimum wage hikes hurt mom-and-pop shops, a far deeper pain is inflicted by tax laws and regulatory loopholes that ensure CEOs continue to prosper whether the economy does well or poorly. Perhaps a more equitable “two-way street” would be a wage law that automatically caps massive CEO salaries during recessions.
Bolin’s bill ultimately failed in a House vote last week, but it’s just one of many measures aimed at weakening minimum-wage laws. Some state policymakers have sought to restrict local governments from passing individual wage ordinances—for example, a new law in Oklahoma pre-empts cities from raising local minimum wages above the state minimum.
Inspired by right-wing think tank concepts, others legislators have sought to carve out exceptions to wage regulations, such as proposing moratoriums on industry-based prevailing wage standards for contractors. Some have even proposed various repeals of state minimum-wage rules, leaving only the federal default of $7.25 per hour. Other tactics include pre-emptively banning local measures that would mandate certain employee benefits, relaxing overtime rules or imposing a subminimum wage for tipped workers that further erodes workers’ earnings in precarious service industries. According to research published in 2013 by the National Employment Law Center, since January 2011, “legislators from 31 states have introduced 105 bills that aim to repeal or weaken core wage standards at the state or local level.”
Such regressive measures are often billed as “fairness” for struggling small businesses. But they actually embody an ideology of letting “free markets” reign over the law.
While Bolin’s proposal flopped, fellow Senator David Novstrup is advancing a bill to let bosses pay a lower “training wage of $7.50 per hour” to minors. Novstrup argued that even though youth are more restricted in the kind of work they can do, the new law means teenagers perhaps “don’t get hired because of the current high minimum wage. We should continue to give young people the opportunity to get needed experience for future careers.”
By paying them less? Economic research suggests that downward trends in teen employment are driven in large part by structural factors—namely kids spending more time in school instead of working (incidentally, education is another way to improve future career prospects). And while some teens may have trouble getting hired, often the culprit isn’t exorbitant wage standards but an overall economic decline, which forces adult workers to compete with high schoolers for scarce lower-wage entry-level jobs. Maybe if countercyclical wage policies were enacted to raise pay scales generally, across different sectors and income levels, job prospects for junior would improve in the long term, because he would no longer have to compete against his mom on the job market for that part-time restaurant gig, since Mom wouldn’t need to take a second job to pay the bills.
Yet ideological opponents continue their stealth war against local wage protections, touting sob stories about the struggling indie bookstore owner or beloved neighborhood diner that’s forced to close because of rising payroll costs.
It’s sad that local shops may suffer when voters and policymakers try to set a minimum value for the labor of people trying to work their way out of poverty. But if your local barber shop shuttered after your city boosted the rock-bottom hourly wage by a buck, don’t blame the extra buck: the minimum wage is a tiny measure to compensate for the damage wrought by an unfair social structure. This systemic inequity isn’t resolved by allowing the poor to be paid even less. To help workers stuck at the bottom of the economy, the only way up is to lift the floor, not pull it out from under them.