Wednesday, January 14, 2015

The Minimum Wage and the Big Picture

Jonathan Chenjeri has developed a well-studied picture of the minimum wage as it could conceivably be applied to small employers. He has put a lot of thought into the economics involved in studying the market conditions that affect the small mom-and-pop proprietor, which are quite different from those of MegaCorp, Inc.

Indeed, we have to understand and recognize that these “market conditions”  allegedly affecting the minimum wage are based not only with the size of the enterprise, but also within the regional locale and local costs of living.   Hence, while we recognize that the Fight For $15 Campaign now being fought by low wage earners everywhere is a necessary first step towards increasing the lot of the lowest strata of the American working class, it most certainly is inadequate in some of the more expensive labor markets of the nation.

Simple mathematics will illustrate this: . The 2014 poverty level established by the Federal Department of Health and Human Services for a family of four is $23,850 a year.  A worker making the current Federal minimum wage of $7.25 an hour for 40 hours a week and 50 weeks a year will gross $14,500—shamefully inadequate by any definition.  Even an employee earning $15 an hour for 40 hours a week and 50 weeks a year will only gross $30,000. A net paycheck allowing for income tax, social security, and Medicare deductions on the average will allow a rough take-home amount of $25,550—barely above the poverty line.

Effective January 1 of this years, twenty states raised their minimum wage . In liberal states like Washington State where the minimum wage was raised to $9.47 an hour, we still have a resultant yearly income of less than the poverty level.

It becomes fairly obvious that a pure and simple “minimum” wage just won’t cut the proverbial mustard.  What is required by the working poor is a living wage, which is a standard more clearly delineated according to local market conditions.

In considering a local market condition, and using the Universal Living wage Formula as developed by the Department of Housing and Urban Development, which basically means not encompassing more than 30% of one’s income for housing, one will see that even the $15 an hour scale would result in economic drowning in Manhattan where the monthly median price of a two-bedroom rental apartment is $4042; or in Los Angeles at $2377,  or in Chicago at $2153.  One might be able to tread water in Austin at $1375 .  In Birmingham, Alabama, the median rent of  $761 would be an example of a market which could best accommodate a living wage of $15 an hour. 

One of the cardinal sins of the American economic system is that working people are defined by how much money they make. Corporate greed has reduced the humanity and lives of working people to a simple line item in the corporate ledger books.  By supporting wage campaigns we should not fall into the crevice of accepting a sub-standard wage as any sort of cure-all.

As socialists we ultimately believe in the abolition of the wage system, but we also realistically recognize that we will have to gain and win those “transitional demands” which lead to the re-distribution of wealth towards the needs of the people who produce that wealth.  An easy first step for wealth re-distribution is higher wages.  Higher wages can be achieved by a step up to guaranteed minimum living wage based on local market conditions. The Fight for $15 campaign is a step towards the guaranteed minimum living wage.

Let’s take one more easy step:  The government’s own criteria used in determining poverty and in determining a universal living wage should be developed to determine a real federal minimum wage scale.  Additionally, these standards developed by the Feds should be given the force of law and enforceable as such.

We can expect to see increasing hostility in this regard on the part of corporate America and their Republican lackeys. Already there is talk, specifically from newly elected governor of Texas Greg Abbot, of restricting the power of local communities to regulate in areas where state and federal controls have stalled.  While Abbott’s  reference was specifically directed towards fracking and plastic bag bans, the logical extension of this argument will be towards the abolition of minimum wage rates within local jurisdictions. Expect to see legislation in this direction in Texas in the months ahead, and we can also expect to see it within the entire spectrum of the Koch Brothers/ALEC/Republican Party monolith.

But perhaps most importantly of all, we should not depend on the government to enact the living wage for us. There is always strength in numbers and the more organized and united people are the better prepared they will be gaining that higher wage. Unions have understood this for decades. It must be us to tell the government what our living needs must be. Even while the law will protect labor organizing and organizers, it will be a rough uphill battle as it always has been. While Jonathan Chenjeri offers the notion of individual bargaining with a small employer to determine wages, we must recognize that only through organization will we have the strength to increase our wages, not only for ourselves, but for all of the rest of us.

Steve Rossignol  1-10-2015

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