Minimum Outrage

Why do workers put up with being cheated like this?

© Bryan Zepp Jamieson
09/04/06
http://www.zeppscommentaries.com/Sociology/laborday06.htm

The woman at the local restaurant wasn’t happy about the state minimum wage being raised from $6.75 to $8.00.

“I’ve been at that restaurant for three years now, and I busted my hump to get those raises,” she said, mentioning that she earned $7.75 an hour, or a dollar above minimum wage. “Now kids will be starting as dishwashers and they’ll be making more than I am now!”

I pointed out that if she had already earned those raises, then her base pay should remain a dollar above minimum wage, which would mean a seventy-five cent raise in January, and a second raise of the same amount the following January. She looked a bit dubious, and I didn’t blame her. In America, where non-union workers have no rights and no protections, demanding a raise – or two days in a row off, or pay for overtime work – can get you fired for no cause.

“The restaurant will have to raise prices” she offered.

“Didn’t it raise prices already this summer?” In fact, it had. Higher food costs, mostly a result of increased gas prices. The restaurant owners didn’t beat their breasts over that. After all, inflated fuel prices are just a legitimate market force, unlike labor, which is a damned nuisance and should be grateful to get any pay at all. So the restaurant, a chain of some 30, raised prices without any grandstanding howls of rage against big oil, and quietly shelled out about $40,000 for glossy new menus that reflected the price increases.

In fact, the restaurant industry is usually the most vociferous when it comes to raising the minimum wage. They make dire predictions of thousands of workers being laid off and hundreds of restaurants closing.

What happens, of course, is that few, if any, restaurants close, and usually the number of restaurants – and people hired – increase over the following year. The reason for this is what I like to call “trickle-down economics” – the lowest paid workers in California find themselves with an extra twenty at the end of the pay period, and decide to splurge and take the spouse out for dinner. The increase in economic activity is more than enough to assimilate the minor increase in operating expenses caused by the increase in labor costs.

What I didn’t tell the restaurant lady was that when I began working as a high school kid 40 years back, we would have sneered at her wage (in real dollars) as serf wages. We got a lordly $1.75 an hour, which doesn’t sound like much until you factor in inflation, and realize that it’s about $11 an hour in 2006 wages. Two hours’ work was enough to fill the gas tank, a quarter of our pay went to rent, and we could usually live pretty well and still stick about 10% of our earnings in the bank. And yes, we ate at restaurants a lot more frequently in those days.

Some economists like to use the “loaf of bread” analogy to show how life really is for low-income workers. In 1965, a minimum wage worker had to work for a little over eight minutes for a loaf of bread. Now, it’s about 24 minutes. In California. In third world states like Texas, it can take 40 minutes to earn a loaf of bread. In the richest and most productive country on earth.

And the economy was in a lot better shape then than it is now!

Speaking of Texas, the Houston Chronicle ran a Labor Day editorial expressing the need for an increase in the minimum wage. Texas, a state noted for fierce independence and distrust of Washington except when it comes to screwing the poor and minorities, has mandated that the state minimum wage be the federal setting. So the wage, by law, is set at $5.15 an hour, and can only be changed if Washington changes it, or if Texas changes its own existing law. The state lege isn’t likely to do that, because the link allows them to blame Washington rather than themselves for the lousy pay. The Chronicle noted that a quarter of Texas workers made $8.72 or less. They further noted that for a family of four where both parents made minimum wage, the parents would have to work 75 hours to reach the federal poverty level. So they would both have to work full time just to be impoverished.

A couple of months ago, I mentioned that there were three million full-time workers that were at minimum wage, and that, contrary to the favored “lucky ducky” propaganda from the Rich White Trash at the Wall Street Journal editorial page, the majority of them were adults, with dependents. Several right wingers took me to task, noting that it was only TWO million who were in that unfortunate situation. I checked, and they were right. Used to be three, but now it’s 2.2 million earning the federal minimum wage.

The reason is that 21 states now have their own minimum wage set above the federal minimum. This includes 8 of the ten most populous states in the union. The two states that took the most of the 800,000 employees from $5.15 an hour since 2001 were New York and Florida. Those right wingers who blasted me for using the old three million figure were quite proud of an “accomplishment” they fought tooth and nail.

The Economic Policy Institute estimates that the minimum wage would have to be $7.25 to match the purchasing power it had when it was first raised to $5.15 an hour in 1997. Presently, 6.6 million workers make less than that.

And of course, even $7.25 is only 60% of the minimum wage in real dollars in the 1960s. Americans have fallen a long way over the past 40 years.

You can understand the greed and general viciousness of the industries who fight to depress workers wages. That’s human nature. It’s not something humans should be proud of, and it’s a mystery why so many Americans celebrate these overprivileged thieves as somehow being responsible for all the wealth and prosperity those same people, um, don’t enjoy. But the greed is understandable.

But when the Fiscal Policy Institute did a study of the 21 states that are above the minimum wage, they discovered that those states enjoyed greater economic growth than the states that have $5.15 baselines. It wasn’t just a minor difference, either. It was one THIRD greater. And what’s more, it was most pronounced in that sector of the economy that most strongly fights increases in minimum wage – the retail sector. Including, yes, restaurants.

Claiming that it’s unfair to business to make them pay a decent wage isn’t just greedy and vicious; it’s also stupid and self defeating. Labor IS a market force whether the self-styled “libertarians” who praise capitalism for the poor whilst advocating socialism for the rich like to admit it or not. Labor isn’t just part of the overhead for business; it is also the customer base.

So if you are a restaurant owner wishing you could pay your employees $2 an hour, ask yourself this: if everyone made that kind of money, who could afford to eat at your restaurant?