An American Scandal: The Minimum Wage

The minimum wage is a scandal. It masks poverty. It must be dramatically raised.

On July 24th, the minimum wage will rise to $7.25 an hour. I applaud people who worked hard to pass the three-step hike. The new level will put some extra money in the pockets of millions of Americans and, modestly, bump up wages that hover above the minimum wage because some employers will want to keep workers they value.

But let’s be honest: the minimum wage is an American scandal. It is a wage that makes us think that we have set a reasonable floor for wages so employers do not exploit people.

But, the minimum wage IS a poverty-level wage. At the grand sum of the new $7.25 per hour, if you worked every single week, every day, you would earn $14,645 a year–with likely no health care, no retirement, no vacation days, no sick days. By comparison, the federal POVERTY LEVEL for a family of three is $17,600–a number that is outdated because it doesn’t take into account the real cost of living. But, even that number is higher than what a person would earn at the new minimum wage.

That is a scandal.

The minimum wage should be raised to $10 an hour, to be followed by additional hikes in the minimum wage so that it begins to reflect both the real cost of living and the incredible productivity of American workers that has not been reflected in their wages over the past 30 years. This is a proposal advocated by a variety of organizations, including Let Justice Roll.

Yesterday, I debated the minimum wage issue on CNBC:

What is startling to me, both from this recent debate and other discussions on the topic, is the continued lies that are spread about who “benefits” from the minimum wage and what truly contributes to a healthy economy.

Here are some facts (drawn from various sources, including the Economic Policy Institute):

Almost 10 percent of the workforce is affected by the minimum wage, either directly or indirectly (“indirectly” means that a rising minimum wage often increases wage levels just above the new minimum wage).

It isn’t true that the minimum wage is just a “starting wage” that people move out of, or that it is a wage just for teenagers working summer jobs or some other false argument. Four out of five minimum-wage workers are adults, and almost 3 in five of those are women. More than half work full-time. A quarter of minimum-wage workers have kids under the age of 18 and 1.2 million are single parents.

It also simply false to say rises in the minimum wage have a large, negative effect on jobs–meaning, that companies have to cut jobs because of the increased cost of a higher minimum wage. There is a logic here, as EPI points out:

“New economic models that look specifically at low-wage labor markets help explain why there is little evidence of job loss associated with minimum wage increases. These models recognize that

employers may be able to absorb some of the costs of a wage increase through higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale.”

But, we should only be defending the minimum wage, in my opinion, as a concept–not praising the level that it stands at. It must be far higher.

So, what is going on here?

The truth is that the scandal of the minimum wage is part of the larger picture of a decades-long robbery of the American worker. The economy that we live in thrives on the backs of people who work for poverty-level wages.

I’ve made this point before: productivity has skyrocketed over the past 30 years but wages have remained essentially flat. Some of that productivity did come from technology advances. But, most of it came because workers labored harder than ever, partly out of fear of losing a job in an economy that has forced people to pile up debt and rely on credit cards to survive.

The astounding wealth hoarded by CEOs and the top one-tenth of one percent of Americans was built up on the backs of hard labor and poverty-level wages. We do not have the slave-labor conditions seen in some other countries around the world. But, without question, the wealth of the country has been created by millions and funneled to a few.

Had the minimum wage tracked productivity over that period of time, the minimum wage should be $19 an hour.

I have also argued that the minimum wage scandal is far more important than the Bernie Madoff-type scandals. My friends, we got into the financial crisis we are in precisely because of the theft of wages of the American worker. Oh, how the free marketeers rejoiced at the decline of unions and the orgy of deregulation. But, as political leaders of both parties stood silent and were swamped by campaign cash from Wall Street and corporate interests, workers’ wages were pummeled.

And, then, what was left? An economy where people had to finance their lives through credit cards and, then, home equity–all illusions of wealth that are now gone.

So, now what? How do people like the CNBC talking heads and our political leaders, who still do not recognize wage collapse as the number one reason for our economic debacle, envision us reviving a decent standard of living for millions of people?

I say that one step is clear: a $10-an-hour minimum wage in 2010 as a small down-payment and a first step towards pushing wages back to a moral level.

Jonathan Tasini: Jonathan Tasini is the executive director of Labor Research Association. Tasini ran for the Democratic nomination for the U.S. Senate in New York. For the past 25 years, Jonathan has been a union leader and organizer, a social activist, and a commentator and writer on work, labor and the economy. From 1990 to April 2003, he served as president of the National Writers Union (United Auto Workers Local 1981).He was the lead plaintiff in Tasini vs. The New York Times, the landmark electronic rights case that took on the corporate media’s assault on the rights of thousands of freelance authors.

This article was originally posted on Working Life on July 7, 2009 and is reprinted here with permission from the author.

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Madeline Messa

Madeline Messa is a 3L at Syracuse University College of Law. She graduated from Penn State with a degree in journalism. With her legal research and writing for Workplace Fairness, she strives to equip people with the information they need to be their own best advocate.