Paying Us As Little As Possible

Let me begin by stating my belief that every person who performs honest work at a socially useful job should be able to live a decent life from his or her earnings. Honest work of almost any kind has social value, which we experience in its most immediate form when the garbage doesn’t get picked up for a few weeks. But the belief that real work should provide adequate pay runs smack into the capitalist imperative to maximize profit for business owners.

So we have a field of people who need money for work performed in order to have a decent life, and a small class of owners who want to pay them as little as possible. Although, in the larger society, there are both upward and downward pressures on wages, most of the power, and thus the downward pressure, rests with the owner. This is not news. It was formulated by Karl Marx way back at the time of our civil war, and he wasn’t wrong.

Given the truth that an individual worker has no bargaining strength against a powerful business owner, his only strength lies in organizing, in numbers. Public and private unions are almost the only defense workers have against predatory hiring and pay policies, and the only chance we have for humane labor laws.

All businesses exist for the sole purpose of bringing profit to their owners. While it’s not true that all business is automatically evil because of this, it’s easy enough to see that the business of business is business, making money. When a business is in expansion mood, buying a company that makes jelly beans is as good as buying one that makes steel beams if they are equally profitable. The business might know nothing about jelly beans, or steel beams, and choose a business similar to their present business, but this is not necessarily true. General Motors, for example, has a financial wing, GMAC (and for several years they found that it was the only thing that kept them afloat).

Less cost means more profit, which is why owners do their best to keep wages as low as possible. Of course, it’s not that simple, because if the wage is too low, the best workers will leave at the first opportunity. This provides some upward pressure on wages. But it’s also true that in times of high unemployment owners can safely gouge the workers for several years until unemployment comes down, and wages are slow to rise after that. That’s why corporations like high unemployment.

Absent challenge from high employment levels, corporate owners see no reason to pay a Living Wage because there are plenty of desperate people who need a job—any job. I’ve seen this in action myself. In spite of all the oil and timber company ads you see that tell us how wonderful and benign they are, business will never do something socially important until they are forced by law to do it—especially when they are out of the reach of American jurisdiction in third world countries. Or if they can be shown that it boosts profit, such as with the many steps that might improve efficiency, which they also fought tooth and nail for decades.

We have minimum wage laws that prevent outright exploitation, but minimum wage is not Living Wage. Nobody can raise a family and have a decent life on minimum wage. Moreover, minimum wage today is lower than minimum wage 54 years ago, adjusted for inflation. This parallels the general erosion of wages and benefits over the same period.

Living Wage will become the norm only when there are laws requiring it. Conservative Republicans are fighting with every bit of their wiles and outright lies to prevent middle class Americans from obtaining the right to a decent life that a Living Wage represents. This is because they, incorrectly, see decent pay as detrimental to the country’s economic health.

Government money comes from people who work and pay taxes. The single most important thing we must do for the national economy during the current downturn, therefore, is to assure adequate tax revenue by getting unemployment under control and boosting average income. Nothing else matters until that happens. Instead, we are laying off masses of public workers and others, cutting budgets, and shutting down important government functions—removing nose to spite face. Unfortunately, no amount of cutting of government expense or beating back middle class income will leave enough cash to adequately address either the budget deficit or the national debt, and the resulting unemployment and underemployment will make it worse. We are already on the path to a national diminution that will leave us weaker, poorer, less healthy, and less educated. That’s called “killing the beast”, something Newt Gingrich has been trying to do for decades. Success here would put us in contention for third-world status.

Pleas for us to buy only American-made or union-made products will never be very successful. People simply don’t have enough money to pass up clothing made overseas for a fraction of the cost of clothing made here. But the long-term task should be to bring a Living Wage and prosperity to everyone in the world—rather than depressing American wages to equal the average Chinese wage, as one Republican politician recently suggested (which BTW comes to about $45/month). If world-wide Living Wage were the goal, the question then becomes, What does this mean on the global market? What it should mean is that the pay of workers around the world would improve. What it has meant so far is that workers in poorer countries are exploited because they can be, and the poorer the population, the more they can be exploited. Back at home, we find we can’t compete with overseas businesses that pay close to slave wages. We all know this. Yet right wingnuts are forever talking as if any rational step to improve lives everywhere is the beginning of the New World Order, a global force of tyranny controlled by the Trilateral Commission (a banking standards committee) with their black helicopters. Tinfoil hats, anyone? (BTW, I just found out that tin foil or aluminum hats are supposed to protect you from mind control. Isn’t that hilarious?)

Worker-owned businesses or co-ops here at home are also strong forces for wage fairness, maybe the only one besides unions. They provide powerful incentive for all workers to always perform at their best level, because the degree of success of the business depends directly on what the workers do. The quality of their work determines the financial success of the company, and therefore determines the value of their shares in it. They are stable, because no worker-owned company is going to be shut down and moved to Bangladesh. Moreover, workers are protected from downturns in the business cycle because officers of the company are chosen by the workers themselves, and are paid by and work for them. In a downturn, most businesses control costs by simply firing a lot of workers; worker-owned companies are far more likely to cut back on everyone’s work hours and/or wages, including officers. Such companies are much more likely to pay a Living Wage, but by their very nature, all businesses experience downward pressure on the wages they pay. Worker-owned does not mean ridiculously extravagant pay, as it does for top officers of big corporations.

None of this means that all regular businesses are run by heartless tyrants, of course, but it does mean that there is something quite impersonal in the course of a company’s functioning that is apart from the morals and ethics of those who work there. There are plenty of companies that have cut back on hours during the present downturn rather than firing people. But there are many more who simply laid workers off, with or without cutting back on top management pay. More often, top management is rewarded with huge bonuses for trashing the lives of thousands of employees and their families this way. They may save the company, but they trash society because they don’t have to pay for it—we all do. Ask yourself: How many jobs, and families, could be saved if a top exec gave back half of his six-million-dollar annual bonus for worker pay? How much do you personally have to pay when some company lays off 10,000 workers in your state?

Living Wage is a win-win policy. Businesses benefit from lower turnover and higher job satisfaction. Workers earn enough for a decent life. Governments benefit from a larger and more stable tax base, thus leveling out the boom-and-bust budgeting seen too often (which, BTW, is a killer for education and many other important governmental functions; you can’t simply buy replacement teachers when the recession is over the way you could purchase a new fleet of company vehicles).

Australia has had an official policy of Living Wage for a hundred years. In most cases, this works well. Many ordinary workers live a decent life, with all the trappings and benefits a Living Wage can bring. That’s why it’s not necessary to tip when one visits. But over the past three decades, neoliberal policies have eroded the wages of some 20% of Australians in certain occupations to the point that they could survive on savings for only a month or two. What happened was that risk was slowly transferred from business and government onto workers. Government services once available to all have become commodities for sale. Health care coverage has eroded, as has unemployment coverage and more.

Living Wage is a reality in several places besides Australia, and it works well. San Francisco is a pretty good illustration. The first step was taken ten years ago. San Francisco, an expensive city to live in, passed labor standards policies that apply to all businesses in the city, and include a minimum wage now at $9.92 an hour, paid sick leave, and a requirement that employers meet minimum standards for spending on employee health care. We residents see the latter when we sometimes see on our check a small fee to support workers’ health at restaurants and other businesses. The evidence is strong that businesses have quickly adapted to these laws without damaging economic growth. A major development project now underway at the old Hunters Point Shipyard adopted a number of such supportive policies. A UC Berkeley study of the Living Wage policy at the San Francisco International Airport found that the program led not only to significant pay increases for 12,000 workers, but employers and employees alike reported improved work effort and morale, dramatically lower turnover, and better customer service. The study found no negative effect on employment…The verdict is clear: labor standards policies of the kind San Francisco put in place improve workers’ income, productivity and health, reduce turnover and decrease job vacancies; they have not reduced the number of jobs. (See Ken Jacobs, Huffington Post.)

Enactment of Living Wage requirements at the federal level would stabilize government and the tax base. It would also do away with the predatory practices of MacDonald-izers, who presently not only create massive public health problems and accompanying expenses in the pursuit of ever more profit, but detract from the national economic health, because of their policies of hiring only part-time workers with no benefits, and paying them the least they can get away with.

The Living Wage calculator lets you see what a Living Wage is where you live: http://www.livingwage.geog.psu.edu/. You can check out progress toward a Living Wage at the Universal Living Wage campaign: http://www.universallivingwage.org/.

PS: Here are a couple of recent comments from newspapers. New York is presently debating Living Wage regulations:

The Editors, New York Post, 9 March 2011:

Here they go again: City Council members are pushing once more for an above-market-wage law in the city…Why can’t these people get it into their heads? This is no time to be killing jobs for New Yorkers. Not that any time is, of course. But that is exactly what the bill would do—destroy jobs. Particularly, those at the lower end of the spectrum. The legislation in question, known as the “living wage” bill, is being pushed hard by union groups—whose members, notably, already have jobs and don’t mind bloating the unemployment rolls further…

Marta Mossburg, NewsPost of Frederick, Maryland, 9 March 2011:

A proposed increase in the minimum wage will raise the quality of life for poor Marylanders like eating cheese fries daily will help someone lose weight…

A number of studies show that raising the minimum wage neither spurs the economy nor makes states wealthier. For example, Joseph Sabia of West Point and Richard Burkhauser of Cornell University analyzed minimum-wage increases across the U.S. and found that higher minimum wages did not reduce poverty rates.

But Marylanders do not have to rely on studies for evidence. If living wages made people and places richer, the City of Baltimore should be a shining example of success. It was the first city in the country to pass a living wage in 1994. The population is down more than 100,000 from 1990, and the number of people employed in Baltimore has dropped by tens of thousands in the past decade.

Part of the reason for the exodus of people and jobs from Baltimore is that raising the minimum wage hurts low-skilled workers by making it harder for them to find a job. Again, multiple studies confirm the fact. And Sabia recently published a study for the Employment Policies Institute showing that minimum-wage increases enacted between 1997 and 2007 had minimal impact on a state’s economic output and actually decreased it in areas that depend on low-skilled workers…

But facts do not matter to supporters. They make emotional arguments to support an agenda whose goals are disconnected from the realities of making a payroll and how people work.

My comment: The NY Post editors are stating something they simply can’t support, that a Living Wage will kill jobs for low income people, or in fact, for anyone. There are certainly problems to be resolved in any such effort, but the experience of San Francisco does not support their contention. They also assert that NYC is going in the wrong direction because the rest of the country is trying to dismantle unions. Yes, with no unions, wages will continue to fall, and so will tax revenues, and the quality of life. No, workers don’t pack up and move to places that pay even more poorly. They try hard to stay in places that pay a Living Wage. More minimum-wage jobs is not something that attracts people.

Ms Mossburg has an apples-and-oranges problem. First, she seems to equate minimum wage with Living Wage. They are different things. The reports she cites deal with minimum wage, not Living Wage. Second, she contends that Baltimore’s 1994 Living Wage enactment caused a drop in population there; it’s unclear whether it’s really minimum wage she’s talking about. However, there are a great many conditions that affect population, and it is more likely that the ability to earn a Living Wage would attract population. It is unlikely that the studies she cites show that decent wages are detrimental to a city. Nor is it true that facts do not matter to Living Wage supporters. If Living Wage were not viable, people would take a different tack in trying to make life decent. Beating a dead horse is not productive (not that beating any horse is productive).

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