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Richard (RJ) Eskow
Published: Monday 23 July 2012
“Raising the minimum wage isn’t just the right thing to do. It’s also economic common sense.”

The Minimum Wage is so Low, it’s Immoral. Here’s Why.

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Economic issues make some people's eyes glaze over, so we'll put this plainly: Today's minimum wage is epic in its injustice and Dickensian in its cruelty. It's a shame that Dickens himself isn't here to write about it.

Oh, and we almost forgot: Keeping it this low isn't very smart, either.

A new report provides a good opportunity to revisit the subject, which leads to an inescapable conclusion: Raising the minimum wage isn't just the right thing to do. It's also economic common sense.

Sen. Tom Harkin and Rep. George Miller have a new minimum-wage proposal that's worth fighting for. Here's why:

Most low-wage workers work for large corporations, not Mom-and-Pop businesses.

Many people assume that most minimum-wage employees work for small, family-owned businesses. But a new Data Brief from the National Employment Law Project finds that 66 percent of low-wage employees work for companies with more than 100 employees. That includes a handful of very large corporations which collectively employ nearly 8 million low-wage employees.

The largest of those mega-corporations is, unsurprisingly, Wal-Mart, with 1,400,000 employees. The next-largest is Yumi Foods, which owns Taco Bell, Pizza Hut, and KFC. After Yumi Foods comes McDonald's.

(And after that, one assumes, comes Alka-Seltzer.)

Also on the list is Staples, Inc., the corporation where Mitt Romney boasts that he "created jobs" before his retroactive resignation from Bain Capital. (Can he retroactively give out some raises, too?)

These employers are "job takers," not "job creators."

Staples, like Wal-Mart and most other corporations on the low-wage list, doesn't really "create" jobs. Smaller enterprises of all kinds are crowded out by the unchecked growth of mega-corporations, which often use their volume to undercut the locals on price until they're driven out of business.

Then they raise them again.

In other words, Staples and the other giant corporations are taking those jobs from other businesses - those entrepreneurial Mom and Pop shops which will soon vanish into American folklore unless we do something.

They're "marking everything down" - including people.

As Dave Johnson explains, corporations like Staples are masters at "marking down" the value of their employees. "Average Staples salaries for job postings nationwide are 51% lower than average salaries for all job postings," he writes.

And remember: Staples doesn't just hire entry-level or unskilled workers. It employs sales people, accountants, purchasing directors, and IT people, as well as managers at the store, local, regional, state, and national levels.

Among those employees, you'll probably find the "Moms" and "Pops" which Staples put out of business - that is, if Mom and Pop have jobs at all.

The minimum wage has dropped 30 percent - almost a third - since 1968. So where are the jobs?

As the NELP project notes, today's minimum wage has 30 percent less purchasing power than it did in 1968.

Corporate defenders say that raising the minimum wage will hurt employment. What does the evidence say?

We checked: The official US unemployment rate in 1968 was 3.6 percent. Today that figure is 8.2 percent. (The real employment figures, including discouraged workers and the under-employed, are even worse.)

A weak minimum wage increases poverty and shatters families.

What does this mean in real life? Let's go back to Staples, where a jobs website reports that cashiers make $8.17 per hour, so-called "Easy Techs" make from $8.76 to $9.08 per hour, and the highest paid reported job ("Easy Tech Expert") pays an average of $10.28 per hour. If these employees work full time (not all of them do) they earn anywhere from $16.340 to $20,960 annually.

The poverty line for a family of four is $23,050, according to Federal guidelines.

Some people are chastising Yahoo's pregnant new CEO for planning to work during her maternity leave and her child's early years. Some of them are the same politicians who are making it impossible for employees at companies like Staples to do anything but working during these years - and without CEO-level childcare.

Under current wage levels, neither parent has the option of taking care of the children at home. To do so would be to to doom them to a life of poverty - a life which, among other things, has been shown to damage both their health and their earning ability for life. Sometimes both parents are working and the family is trapped in poverty anyway.

America's large corporations: They're Ebenezer Scrooge, rebranded and publicly traded. The life they've decreed for their workers would be all too familiar to the Cratchit family - especially Tiny Tim.

They've got the dough.

The NELP reports notes that 92 percent of the 50 largest low‐wage employers in the country were profitable last year. And they've more than recovered from the recession: 75 percent are collecting more revenue, 63 percent are earning higher profits, and 73 percent have higher cash holdings.

They've got the money. They just don't want to spend it.

Like other large corporations, Wal-Mart came through the recession with flying colors while most of us continue to struggle. Its profits grew by 23 percent.

For the next largest corporations, Yumi Foods (which lost its greatest asset with the passing of Gidget the Dog) and McDonald's, those figures were 45 percent and 130 percent respectively - a rapid bloating which human beings can only achieve by consuming their products.

The rich get richer, chapter gazillion.

Some more useful figures from the NELP report:

2012-07-22-NELP.jpg
Seriously? $20 million per year for managing KFC, Taco Bell and Pizza Hut? There's nothing to say after that. (Except "Are there no prisons? Are there no workhouses?" And that for all that money you'd think they'd figure out how to make pizzas that don't taste like cardboard.)

The minimum wage isn't automatically adjusted.

Some people are surprised to learn that, unlike some other government rates, the minimum wage isn't automatically adjusted for inflation. Bills which raise it have to be submitted by courageous politicians, and then other politicians must resist big-business interests to vote for it.

Guess how often that happens?

That's why the proposal by Sen. Harkin and Rep. Miller deserves, and needs, a lot of support.

A 35 percent wage increase doesn't mean it costs 35 percent more to hire or keep an employee.

The Harkin/Miller proposal would gradually increase the minimum wage from $7.25 to $9.80 per hour, and would then index it to inflation. An increase of approximately 35 percent may strike some people as hefty, but it's a modest number which basically makes up for the ground lost between 1968 and the time it takes effect.

Those who are afraid it could corporate "sticker shock" should understand that increasing somebody's wages by 35 percent doesn't mean you're increasing the cost of employing them by 35 percent. While there are different cost structures in the corporate world, wages can be as low as one-third of an employee's total cost and are rarely more than half.

Why? Big corporations tack on a lot of overhead for their total employee costs - costs which includes those overpaid CEOs, along with their jets, and other perks, as well as more legitimate expenses for centralized corporate functions like purchasing, administration, and IT. There are also other fixed costs attached to employing someone, including insurance, physical housing, and utilities.

The less an employee makes, the lower their wages are likely to be as a percentage of the total employment cost. Raising the minimum wage by 35 percent won't increase Wal-Mart's or Yumi's cost of employing someone by nearly that much. And, as we were saying: They've got the money.

Raising the minimum wage can create jobs -- here's how.

Think of a minimum wage increase as an instant economic stimulus funded by the runaway profits of the major corporations.

People who are struggling to get by on minimum-wage jobs have a lot of pent-up demand - to fix or replace that broken-down car, to put decent groceries on the family table, or to purchase the necessities and tiny luxuries of life.

They're not going to put that money into hedge funds or Swiss bank accounts. They're going to buy stuff. When they do, local businesses are going to need people to sell them that stuff. That means there will be more jobs in the community. It also creates more revenue for the smaller businesses that employ low-wage workers, which will help revive real capitalism - the Mom and Pop kind.

As the demand for the stuff they're buying goes up, the companies that provide it are going to have to hire people to produce it for them. That creates even more jobs.

And every time another job is created, more people buy more stuff - which in turn creates more jobs. That's the cycle of economic growth. For a real-world example, look at this country's economic boom after World War II.

No Excuses

At least corporate executives can come up with some explanation for their behavior, however weak, since they're responsible for their corporation's finances. That doesn't excuse the political leaders who let this situation develop - or a society whose soul-sickness lets it turn a blind eye to the greed of some and the suffering of others.

And here's a suggestion: Politicians should be forbidden from using the phrase "family values" until they've voted to raise the minimum wage.

The cycle of growth has been choked off by the weeds of unrestrained greed. We help can get it started again by raising the minimum wage. It would also remove a moral stain from our national conscience. As Tiny Tim would say: "God bless us, every one."

(I can hear them on Fox now, can't you? "That kid talks like a socialist!")

No wimpiness.

There's something else about the Harkin/Miller proposal that makes it worth supporting: In drafting it they appear to have avoided contracting Democratic-itis, a disease which has reached pandemic proportions within their party's leadership.

Symptoms of Democratic-itis include a pronounced reluctance to take clear positions on any issue, rhetoric which presents two conflicting points of view, and a compulsion to weaken all policy proposals by presenting them alongside other policies which undercut its objective. (For a case study see "Jobs proposals conjoined with 'deficit reduction' packages erode party's base," from the Journal of Political Disorders.)

The Harkin/Miller proposal is refreshingly free of these symptoms. Besides, it would raise wages for 28 million American workers. Take two votes on it and call us in the morning.



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ABOUT Richard (RJ) Eskow

Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology.

RE: "The poverty line for a

RE: "The poverty line for a family of four is $23,050"

Why does a husband or wife with no skills (a minimum wage earner) have two children? Must America pay for their youthful indiscretions?

Who says they started out

Who says they started out that way? Maybe that was the only job available after their jobs went over seas.

what % of mini wage at mcd

what % of mini wage at mcd are under 21?

What does that matter? They

What does that matter? They shouldn't be paid a livable wage?

A Truly Equal Opportunity

A Truly Equal Opportunity Society: The child of the laborer, the child of the poor, must have--as the child of the rich has-- easy access to good nutrition, easy access to healthcare, easy access to good education and easy access to housing for the family. This "American Dream" can only happen with an adequate and progressive taxation.

For a long time my husband

For a long time my husband has quipped, "Wal-Mart - always lows wages, always."

I can vouch for the pent-up need for goods and services. Low wages causes you to postpone replacements and repairs. We have a little bit more income than we did and right away we are bought a better car and are looking to replace broken appliances and plan for overdue repairs. More money, and I would also be hiring carpenters, roofers, etc. and send the kids to camps or classes they would like. I would love to have enough money to make a difference to the small businesses around me.

I recently read a Career

I recently read a Career Builder ad for an unpaid internship at the Kellogg's pop tart factory in Muncy, Pa requiring 2 years experience as an unpaid intern to qualify for consideration -- they're looking for rich but stupid applicants.

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