Denying Minimum-Wage Workers A Raise Is Craven and Grotesque

Corporate CEOs make 231 times more than the average worker, but balk at the idea of raising minimum wage by $1.50

by Heidi Moore

The president ignited a controversy in his state of the union speech by saying he wants to raise the minimum wage by $1.50, to $9 an hour. He argued that it is shameful that someone working full-time for the current minimum wage of $7.25 would still be below the poverty line.

Opponents – led by Speaker of the House John Boehner and an endless cadre of mustache-twirling corporate leaders and overpaid Washington think-tankers – have said they oppose the president's plans. They argue that employers forced to pay a higher minimum wage will just hire fewer people to work full-time, that the promise of economic progress from higher pay is illusory, and that a boost in the minimum wage rarely translates to an uptick in economic activity.

These are empty threats, and spurious ones.

The issue about minimum wage, for instance, has almost nothing to do with full-time workers and whether they get hired or not. Only 5.2% of hourly workers are paid minimum wage or below. That's 3.8 million people. It is true that affecting the pay of such a small number of people won't solve America's increasing problems of poverty or income inequality by itself.

But what happens when you look at part-time workers? Then you understand how craven it is to deny workers minimum wage.

There are 8 million workers who are working part-time due to economic reasons, according to the Bureau of Labor Statistics. That means that they want to work full-time, but can't. There are also 18.7 million workers who are part-time out of choice, or for "non-economic reasons".

Those part-time workers are where poverty ends up concentrated, and where the minimum wage will make the most impact.

Part-time workers are much more likely to end up working for minimum wage, according to the BLS's analysis. Fast-food makes up a decent portion of minimum-wage jobs – that's why McDonald's stock fell the most after the president announced his plan – and those workers tend to be older and less likely to be able to find jobs elsewhere. They have no economic leverage.

These part-time, minimum-wage workers also tend to include people who may be working multiple jobs to make ends meet. No matter what they do, they will end up below the poverty line. In December, Bloomberg reported the story of Tyree Johnson, a homeless man who used his two part-time, minimum-wage jobs at McDonalds to pay for a nightly room at a single-occupancy hotel. He's been working for two decades and still can't get the hours necessary to make his work full-time. He scrubs with soap in the sink each day because, he told Bloomberg, "I hate when my boss tells me she won't give me a raise because she can smell me." Johnson is just one story of many, obviously.

So when corporate leaders talk about how the minimum wage won't pull people up from the poverty line, they're right: many companies that rely on minimum-wage workers, from McDonald's to Walmart, have already figured out how to treat their workers as commodities, and poverty is now built into the system because of that. In a longtime period of joblessness like the one we're living through, people will take whatever job they can get.

But there is an intellectual dishonesty here too, as well as a craven contribution to the country's economic woes. Corporate leaders shouldn't have to be told by the government to pay their workers a living wage. They know that consumers will drive the recovery, but consumption by the rich doesn't do it. You need the middle and lower classes.

So when those corporate leaders resort to threats to hold workers hostage – citing numbers about how raising the minimum wage by $1.50 will cause them to fire people – they should take a step back and look at some other numbers.

Try this number, for instance: Over one in five American children is living in poverty. There are others, but are they really necessary? This is the world's leading country and 20% of children are part of families that can barely find money to eat.

Aside from the numbers, there is the issue of image. There is something truly grotesque about corporate leaders who earn millions of dollars – or even hundreds of thousands of dollars – arguing over paying their workers literally pennies more. Those workers often have to rely on food stamps or government welfare programs to make up the difference. Meanwhile, company CEOs have barely received a cut in pay for years, and on average they make 231 times as much as the average worker. That's a lot of money, obviously. So the idea that paying $1.50 an hour more in minimum wage would break their companies and force them to save on costs is patently ridiculous. The first and most obvious cost they would have to think about cutting would be their own pay packages. What if those CEOs made, say, only 200 times the average worker? Or 100 times? One suspects their companies could afford that uptick for poorer workers then.

Most of all, the insistence of business leaders on a lower minimum wage looks, to any other country, completely revolting. It is a Dickensian image of corporate callousness, and it comes just when Corporate America is trying to dig out from its image hole of appearing unconscionable and dastardly.

Business leaders and plump Washington lawmakers would do well to try to step back from their fat bank accounts and their sense of entitlement and put themselves in the shoes of someone who works part-time just to be able to afford food to eat and a bed for the night. Is that the America they want to create? Because keeping poor people down so that they can't even dream of being middle-class seem like a full-time task – although it seems to pay those corporate leaders a lot more than minimum wage.



Heidi Moore is the Guardian's US finance and economics editor. Formerly, she was New York bureau chief and Wall Street correspondent for Marketplace, from American Public Media


Nine Bucks an Hour? A Call for a Living Wage at $10.50 or More

by Ralph Nader

How could Barack Obama say, in his State of the Union speech, “let’s declare that in the wealthiest nation on earth no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour”?

Back in 2008, Obama campaigned to have a $9.50 per hour minimum wage by 2011. Now he’s settling for $9.00 by 2015! Going backward into the future is the price that poverty groups and labor unions are paying by giving Mr. Obama a free ride last year on this moral imperative. How can leaders of poverty groups and unions accept this back-of-the-hand response to the plight of thirty million workers who make less today than what workers made 45 years ago in 1968, inflation adjusted?

But, of course, the poverty groups and labor unions chose not to mobilize some of the thirty million workers who grow our food, serve, clean up and fix things for us to push for a meaningful increase in the minimum wage before Election Day.

It gets worse. The Obama White House demanded “message discipline” by all Democratic candidates. That meant if Obama wasn’t talking about raising the minimum wage to catch up with 1968, none of the other federal candidates for Congress should embarrass the President by speaking out, including Elizabeth Warren, of all people, who was running for the U.S. Senate from Massachusetts.

It didn’t matter that the U.S. had the lowest minimum wage of any major western country (Australia is over $15, France over $11, and the province of Ontario in Canada is $10.25 – all of these countries also have health insurance for all).

It didn’t matter that several cities and 19 states plus the District of Columbia have higher minimums, though the highest – Washington state – reaches only to $9.19.

It didn’t matter that two-thirds of low-wage workers in our country work for large corporations such as Walmart and McDonald’s, whose top CEOs make an average of $10 million a year plus benefits. Nor did it matter that these corporations that operate in Western Europe, like Walmart, are required to pay workers there much more than they are paying Americans in the United States where these companies got their start.

Haven’t you noticed how few workers there are in the “big box” chain stores compared to years ago? Well, one Walmart worker today does the work of two Walmart workers in 1968. That is called a doubling of worker productivity. Yet, many of today’s Walmart workers, earning less than $10.50 an hour, and are making significantly less than their counterparts made in 1968.

Nobel-Prize-winning economist Joseph Stiglitz, told me that minimum wage policy relates intimately to child poverty. Single moms with children on a shrinking real minimum wage “translates to child poverty” and is “creating another generation” of impoverished people.

The arguments for a higher minimum wage, at least to reach the level of 1968, are moral, political and economic. James Downie writing in The Washington Post provided five reasons to raise the minimum wage: “1) it will help the economy; 2) it reduces poverty and inequality; 3) it reduces the ‘wage gap’ for women and minorities; 4) indexing the minimum wage is, well, common sense; and 5) it’s consistent with American values.”

Downie gives historical perspective on just how far our economic expectations have slid when he quotes Theodore Roosevelt at the 1912 Progressive Party convention:

“We stand for a living wage…enough to secure the elements of a normal standard of living – a standard high enough to make morality possible, to provide for education and recreation, to care for immature members of the family, to maintain the family during periods of sickness, and to permit a reasonable saving for our old age.”

In the ensuing 100 years, worker productivity has increased about twentyfold. Why then are not most workers sharing in the economic benefits of this productivity? With other worker advocates, we chose to demonstrate on Feb. 12, 2013 before the headquarters of the U.S. Chamber of Commerce whose business coalition opposes increases in the minimum wage while its members report record profits and boss pay. And before the headquarters of the large labor federation – the AFL-CIO – we urged well-paid union leaders to devote more of their power and resources on Congress and the White House to lift up the minimum wage for those they like to call their “brothers and sisters,” from the ranks of the working poor.

The last time – 2007 – a higher minimum wage law was passed under the prodding of the late Senator Edward Kennedy, nearly 1,000 business owners and executives, including Costco CEO Jim Sinegal, the U.S. Women’s Chamber of Commerce CEO Margot Dorfman (two thirds of low-income workers are women), and small business owners from all 50 states signed a “Business for a Fair Minimum Wage” statement.

It read: “[H]igher wages benefit business by increasing consumer purchasing power, reducing costly employee turnover, raising productivity, and improving product quality, customer satisfaction and company reputation.”

Listen to those words, Walmart! You badly need to improve your reputation, given your recent major missteps.

Catching up with a 1968 federal minimum wage of $10.50, inflation adjusted, should be a winnable goal this year. Once the media starts regularly reporting on the human consequences of unlivable wages, and once the entry of more and more of the thirty million workers to marches, rallies and town meetings grows, neither the Republicans nor the Blue Dog Democrats will be able to stop this drive. Congressional districts all have many such workers in their districts and polls show 70 percent popular support for raising the minimum wage. That includes millions of workers who call themselves conservatives.

The April Congressional recess – the first two weeks of the month – will be the first opportunity to show up where it counts – at the town meetings held by senators and representatives back home. Filling those seats usually requires two to three hundred local voters. If workers rally, by the time the lawmakers go back to Congress, they’ll have a strong wind to their back to face down the lobbies for greed and power, who have money, but don’t have votes.

Check out our website and join this long overdue initiative.



Ralph Nader is a consumer advocate, lawyer, and author. His latest book is The Seventeen Solutions: Bold Ideas for Our American Future.

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