There is much talk about the minimum wage. What was once a way for teenagers and college kids to earn a little pocket money has devolved into the take-home pay for a vast swath of America. Defenders of a low minimum wage insist that most of us benefit from workers being paid very little; lower wages mean lower costs for Walmart and others, and so lower prices for us.
Makes sense, except that it is not true.
The difference between what Walmart pays the majority of its employees and what those employees need is made up by taxpayers in the form of food stamps and other assistance. Walmart is America’s largest private employer, so we’ll use them here for most of the examples, but this applies across the board.
Choose your statistic to understand the problem: about 25% of all employed people in the U.S. receive some form of public assistance; in the fast food industry, it is 53%. About 1 out of every 3 retail workers gets public assistance. In sum, American taxpayers subsidize the minimum wage with $7 billion in public assistance.
Taxpayers Foot the Bill for Low Everyday Prices
Let’s break it into a smaller piece: After analyzing data released by Wisconsin’s Medicaid program, the House Committee on Education and the Workforce estimates that a single 300-person WalMart in Wisconsin costs taxpayers $5,815 per Walmart associate in public assistance paid.
It isn’t about more hours: The families of more than half of the fast-food workers employed 40 or more hours per week are still enrolled in public assistance. More hours at a low wage still does not equal a living wage.
Now, if you’re a certain kind of person, just stop reading here. In a country with such abundance as America, people should not starve to death, being told on the way down to “get a job, loser.” And none of this is about the politics of left and right; it is about the politics of up and down. The answer is not to cut public assistance, the working poor be damned, let them eat cake. If you want that kind of society, go troll some other web site. The answer is for companies to pay a living wage. If they won’t do it voluntarily, then we must raise the minimum wage. It has not gone up since 2009 and it is damn well time for it to do so. In fact, we can’t afford not to.
But Won’t Raising the Minimum Wage Raise Prices? Cost Jobs?
Let’s tackle the easy stuff first. No business offers paying jobs as a public service. They hire people to make money. When they need more workers to make more money, they hire more. When they no longer need those workers, they lay them off. Ever heard of Christmas help? A higher minimum wage will not cause businesses to cut jobs; they can’t do that. Who’d cook the burgers?
What about higher prices? The quick answer should be obvious by now. Whatever you think you are saving at the cash register in Walmart due to those lower wages, you as a taxpayer are paying anyway in taxes to feed the woman ringing you up. If store paid a living wage, step one would a lessening in demand for public assistance. Ka-ching, lower taxes!
But let’s follow the money. Walmart consistently pays the lowest wages they possibly can, and claims that keeps prices down. Walmart is not alone in this practice; the average family’s income is lower today than at any point in the last ten years, income inequality more extreme than at any point since before the Great Depression. The U.S. now has the highest proportion of low-wage workers in the developed world. The fall in wages parallels another trend line: in January of 2013, the Bureau of Labor Statistics reported that union membership had reached a 97 year low in America.
Welcome to Feudalism
Where could the money to pay workers a living wage come from, except of course by raising prices?
The top one percent of income earners garnered 93 percent of income gains in the recent recovery. In the third quarter of 2012, corporate profits reached $1.75 trillion, their greatest share of GDP in history. During that same quarter, workers’ wages fell to their lowest share of GDP on record. The top six members of the Walton family (owners of Walmart) own as much wealth as 48 million other Americans combined. Meanwhile, among 35 economically advanced nations, the U.S. has the second highest rate of child poverty, 23%, just slightly better than Romania.
How Many Miles Can You Drive on a Gallon of Blood?
If I had a crayon I’d draw you a picture, but I think you don’t really need that at this point. None of this is accidental, some sort of invisible hand at work.
Companies will continue to demand Federal, state and local governments keep the minimum wage as low as possible. The same corporate entities will then continue to have those low wages subsidized by the taxpayers. Companies will continue to spew out propaganda to convince those same taxpayers that people on public assistance are lazy cheats, and that low wages mean low prices. Capping wages at 2009 levels assures that any broad rise in societal prosperity will not reach low-wage workers, and there is no broad upward path for retail workers and fry cooks. It’s not about education, either: the percentage of low-wage workers with at least some college education has spiked 71 percent since 1979, to now encompass over 43% of all low-wage workers. Meanwhile more and more money will be hoovered up by an ever-concentrated group of the super wealthy, squeezing their workers tighter and tighter. Hey, how many miles can you drive on a gallon of blood?
In today’s America, even working full-time, at most jobs you can’t earn enough to live with government assistance. More and more of everything is owned by fewer and fewer people. If you look that stuff up in a reference book, it is called feudalism. It is our future, and, of course, thank you for shopping at Walmart!
BONUS: Charles Ferguson, director of the Wall Street documentary “Inside Job” wrote:
Far from being in an era of brutal partisan warfare, as conventional wisdom holds and as watching the nightly television news might suggest, the United States is now in the grip of a political duopoly in which both parties are thoroughly complicit. They play a game: they agree to fight viciously over certain things to retain the allegiance of their respective bases, while agreeing not to fight about anything that seriously endangers the privileges of America’s new financial elites. Whether this duopoly will endure, and what to do about it, are perhaps the most important questions facing Americans. The current arrangement all but guarantees the continuing decline of the United States as a nation, and of the welfare of the bottom 90% of its citizens.
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