Raise the Minimum Wage

For the past forty years or so, the interests of the Bezos and Zuckerbergs have held  almost absolute sway in America. Shareholder value reigns supreme. If it cannot be monetized, it must not be of any value. That has to change or America will lose its soul.

The current debate over Joe Biden’s proposal to raise the minimum wage in America to $15 is heating up and once again the bias against the poor in the US economy is appallingly obvious. Even though the increase is designed to be implemented over a four-year period, some politicians and businessmen predict financial ruin. 

Their scenario is bizarre.  A boost in wages will produced an annual salary of slightly more than $31,000, less than half the current national median household income of about $68,000. The increase will affect about 40 percent of the US workforce, but only about two percent of the nation’s work force receives the existing minimum wage of $7.25 an hour. 

Critics have seized upon a recent analysis by the Congressional Budget Office that project a loss of 1.4 million jobs if the Biden proposal is adopted. However, the study also estimates that 900,000 Americans would escape poverty. Exactly how having nearly a million of our fellow citizens enjoy better financial circumstances would lead to a loss of jobs is difficult to comprehend. 

Virtually all of the workers who would receive a pay increase under this legislation are likely to increase their spending accordingly. In our consumer-based economy that inevitably will lead to more jobs being created. 

It should also be noted that many of those being paid the current minimum wage, or something close to it, are employed in fields that are of critical importance although they do not always  require educational certification--- jobs like home health aide, childcare provider, janitor or housekeeper, and food preparer. These jobs are not likely to be eliminated. 

Truthfully, the Biden proposal is about more than economics. It is about whether or not we care about the worth and dignity of every American. 

The pandemic has exacerbated some of the income equities that are reflected in today’s society. According to the Pew Research Center, since 1989 the wealth gap among the nation’s richest and poorest families more than doubled. An analysis by the Institute for Policy Studies claims that since March 2020, the net worth of America’s 643 billionaires increased from $2.9 trillion to $3.5 trillion while another 29 were added to the list. 

The level of inequity is apparent in that the increase in billionaire wealth was twice as much as the value of all the stimulus checks paid out to Americans thus far. 

CEO compensation  provides another example of the income inequities rampant in our economy. The management guru Peter Drucker in the 1970s suggested a CEO-worker pay ratio of 20-1. Today, despite legislation requiring corporations to reveal publicly the ratio has climbed to an average among leading companies of approximately 300-1. Median pay for the top 400 corporate chief executives has stayed in the neighborhood of $20 million annually. 

These numbers seem to earn little more than a yawn from political leaders. Probably related to the fact that corporate CEOs are major campaign contributors. 

But the numbers have consequences. If pay for each of those 400 corporate executives was reduced to say $5 million and the other $15 million paid out in salary and wages to employees earning less than $142,800, nearly $400 million in additional money would be paid into the Social Security Trust Fund alone, forget about the benefits of the additional earnings available as well as the additional jobs that might result. 

Not everything of value in society can be monetized. Taking care of the elderly and the infirmed, caring for children, ensuring their health and safety, and making sure our food and drink are safe to enjoy, all are invaluable. The janitors and housekeepers in my granddaughters’ school may not be as important as their teachers, but if custodians fail to do their jobs, the environment for learning  suffers severely. Just think of how critical the efforts of these workers have been during the pandemic in limiting the threat of infection from Covid-19 and its variants. 

And by the way, our society does not appear to consider teachers as important as we should, given the role we expect teachers to play in preparing our children for life. In both Carolinas the starting salary for teachers is not much better than $15 an hour. 

We need to examine what constitutes economic growth in America. The current system for calculating Gross Domestic Product is absurd. A dollar spent on repairing hurricane damage is valued the same as a dollar invested in a school or health facility. In order to determine real worth some consideration should be given to the purpose for which a dollar is spent. 

That is what needs to be done in evaluated the proposal to raise the minimum wage. The benefits of improving the livelihood of people who have not been served well by our economy in recent years are clear. Surely they are just as valuable as Jeff Bezo’s dreams of space travel or Mark Zuckerberg’s quest for a social media monopoly. 

And if there are temporary or even permanent changes that need to be accommodated, government has the capacity to make those adjustments. America proved that during the Great Depression, we can do it again in the 21^st century.