Minimum wage: what if they're right?
|Protesters in Illinois, from www.progressillinois.com|
There are arguments for and against an increase, either to the $10.10 an hour proposed by the Obama administration and congressional Democrats, or to a lower level as suggested by Senator Susan Collins (R-Maine). Advocates say the increase will help low-wage workers without having a negative impact on the economy, and this certainly is plausible. Those whose wages increase would surely spend most of the increase, which is exactly what the Larry Ellisons of the world are not doing with their mega-millions. That spending would stimulate those parts of the economy, possibly enough to create more job opportunities. Advocates can also note accurately that previous minimum wage increases have not had cataclysmic economic outcomes.
|Benefits of a minimum wage increase illustrated, from www.wvpolicy.org|
|Minimum wage opponents play the 'small business card'... from eaglerising.com|
However you feel about the economic or ethical ramifications of a minimum wage increase, we should take seriously the claims of both sides. Which means stopping to consider what it means if, as congressional Republicans claim, the proposal would strike a death blow to businesses. Almost every Republican who spoke in the Senate floor debate on the minimum wage April 30 had a tale to tell of a business that would be put under. For Pat Roberts (R-Kansas), it was a hardware store. For John Cornyn (R-Texas), it was a fast-food franchise:
Just ask Robert Mayfield from Austin, TX, where I live. Mr. Mayfield has been in business for 35 years now, and he is pretty successful. He also knows a thing or two about the consequences of rising labor costs. This is what we are talking about. For a business, this is the overhead. This is the labor costs they have to pay out of their income.
Mr. Mayfield wants Members of Congress to know that he strongly opposes this proposal because it will cost people jobs. Here is how he describes it:
What's most devastating about an increase in the minimum wage is that costs go up, and as a business owner, I have to raise prices--So if we think we can pay somebody $10.10 an hour to work in a McDonalds and it won't have an impact on the cost of a Big Mac, well, we are living in a fantasy world. And that is what Mr. Mayfield says.
I have to raise prices, and sometimes the market [won't bear it]. In the end, jobs will be lost and service will suffer . . . The people in Congress wanting to pass a minimum wage bill don't know any more about how a business works than a hog knows about Sunday School. What makes it worse is Obamacare hanging over our heads. It's a job killer.
|Minimum wage increase drives unemployment illustrated, from www.zerohedge.com|
Which means we'd only be able to afford some of what we get now. We in the middle class need to look each other in the eye and admit that it's very possible that our lifestyle depends on other people being badly paid.
There are a lot of people in this economy getting the short end of the stick. And if Cornyn is right, that must continue to be the case.The cockeyed optimist in me hopes that the Republicans are wrong, and that jonesing wages at the low end will not only help those workers but restore some much needed opportunity to the American economy. The handwringer in me says that if middle-class lifestyles are reliant on low-wage labor (and automation), we're all going to hell in a handbasket, except some of us faster than others. We cannot live together as a people if the system in which we operate requires that a substantial portion of the population gets the shaft so the rest of us can get by.
Binyamin Applebaum, "In Tepid Wage Growth, Signs of a Still Fragile Economy," New York Times, 5 May 2014, B3 and http://www.nytimes.com/2014/05/05/upshot/in-tepid-wage-growth-a-potent-sign-of-a-far-from-healthy-economy.html?rref=upshot
AND MORE, FROM HELPFUL READERS...
Jacob Smith, "Econ 101: The Minimum Wage," The Inked Economist, 19 May 2014, https://sites.google.com/site/theinkedeconomist/fresh-ink/econ101theminimumwage
University of Chicago Booth School of Business, "Minimum Wage," ICM Forum, 26 March 2013, http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV
Allen Vander Meulen III, "Minimum?," The Here and the Hereafter, 22 May 2014, http://allenvandermeulen.org/2014/05/22/minimum/