Corporations are suppressing wages—there’s an easy fix for that

Don’t believe the optimistic hype about wages “naturally” rising. About one-third of American workers are shockingly underpaid as a result of the federal government’s continued refusal to raise the minimum wage.

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SOURCEIndependent Media Institute
Image Credit: Common Dreams

This article was produced by Economy for All, a project of the Independent Media Institute. Sonali Kolhatkar is the founder, host and executive producer of “Rising Up With Sonali,” a television and radio show that airs on Free Speech TV and Pacifica stations. She is a writing fellow for the Economy for All project at the Independent Media Institute.

Amid all the good news about successful labor organizing and job growth in the United States is the stark reality that wages continue to remain inexcusably low even as inflation rises. A new government report by numerous agencies including the U.S. Treasury Department came to the stark conclusion that corporate power is suppressing wages.

Two weeks later, the international aid organization Oxfam America released a report consistent with this finding, that millions of American workers continue to earn less than $15 an hour. People of color and particularly women of color are disproportionately impacted—as is always the case.

But, pro-corporate coverage paints a rosy picture about the U.S. economy—one that requires no intervention because things are apparently humming along just fine on their own.

The government report, barely noted in the media, was the result of a collaboration between the Treasury Department, the Department of Justice, the Department of Labor, and the Federal Trade Commission. It concluded that wages in the U.S. are 20 percent lower than they should be and that this state of affairs is the direct result of corporations wielding their power over the labor market.

Yet, conservative think tanks like the Competitive Enterprise Institute (CEI) continue to insist that wages are “naturally rising far beyond… [the federal minimum wage] due to basic supply and demand,” and therefore government intervention to raise the floor would be a bad idea. CEI cites how Target is already paying workers between $15 and $24 an hour. It offers no solution for how underpaid workers can afford to live if inflation continues to rise. Indeed, the only problem that the organization seems to care about is how rising wages could contribute to inflation.

But the Treasury Department’s report points out that corporate power is unnaturally suppressing wages in myriad ways including the offshoring of labor to nations where wages are even lower, the imposition of so-called “noncompete” contracts that undermine workers’ ability to switch jobs within their field, and the misclassification of workers that prevents them from exercising labor rights such as joining a union.

There is nothing “natural” about that.

A decade ago, the Fight for Fifteen movement, which was born in Chicago’s fast-food industry, demanded at least $15 an hour in wages. Ten years after the campaign was launched, most states still do not require employers to pay $15 an hour. While Washington, D.C., now has a $15.20-an-hour minimum wage, it remains an exception. Large states like California and New York are inching upward in the right direction, and a total of 30 states now require minimum wages to be higher than the federal minimum wage. But that is an extremely low standard.

The federal government’s minimum wage ought to be a national shame, remaining unchanged since 2009 at an embarrassingly paltry $7.25 an hour. This is the longest that the government has gone without raising the federal minimum wage since the New Deal.

According to Oxfam America’s new report, “The Crisis of Low Wages in the US,” “more than 31.9 percent of the US labor force, or 51.9 million workers, currently make less than $15 per hour, and many are stuck at the federal minimum wage.”

Dr. Kaitlyn Henderson, a senior research adviser with Oxfam America’s U.S. Domestic Policy Program, who authored the report, told me in an interview that “it is shocking, especially considering that this is the highest [that] inflation has been in four decades.”

Even those making $15 an hour earn barely enough to get by. The supposedly high upper limit “breaks down to $31,200 a year—before taxes,” explained Henderson. This means they “have a harder time keeping a roof over their head and food on the table. This is not enough for an individual to live [on], much less a working family.”

If this crisis is not apparent to the public, we can thank institutions like CEI that spread nonsense about wages “naturally” rising, and the corporate media’s near-exclusive focus on the number of jobs over the quality of jobs and pay. Media outlets routinely obscure the catastrophe of low wages each month when the Labor Department’s jobs report generates stories that focus on employment numbers and little else.

For example, the New York Times on March 4 covered the February 2022 report signaling “a flood of new jobs and new workers last month,” which to the paper meant that “the pandemic’s vise grip on the economy may be loosening.” The story featured quotes from pro-corporate economists such as Morgan Stanley’s Robert Rosener who said, “We’ve continually been surprised by the resilience of the U.S. labor market.”

This upbeat tone continued throughout the story, even when discussing wages: “The labor force grew, unemployment fell, and average hourly earnings were virtually unchanged from January, although they are up significantly over the past year, particularly for workers in low-wage industries.”

Anyone reading the New York Times or CEI’s reports would come away feeling optimistic about the state of the economy and adopt a hands-off approach. But Oxfam America’s report, which covers wages through December 2021, arrives at a very different conclusion where nearly a third of workers are scraping by on meager wages. “In the United States, the value we attribute to shareholders is somehow greater than the value we attribute to the workers who make our society function,” writes Henderson in the report.

Another major blind spot in pro-corporate economic coverage is how income inequality is delineated along racial lines. According to Henderson, “low-wage workers are disproportionately women, people of color, and women of color especially.” Henderson referred to the “occupational segregation” that Black and Latino workers are subjected to.

“When you’re thinking about it through an intersectional lens, where you’re considering race and gender, the pay gap increases substantially,” Henderson told me. So, women of color, who are overrepresented in industries like child care, are among the hardest hit. It should not surprise us then that, as per Henderson, “Child care is one of the lowest-paid professions in the United States,” and this “reflects the value system we have in this country.”

The Center on Budget and Policy Priorities (CBPP) suggested that while elite figures and institutions were celebrating Women’s History Month in March, one way to put their money where their mouths are is to support the women who work in child care and home health care. CBPP’s Diana Azevedo-McCaffrey wrote that the women of color who dominate these industries and are grossly underpaid to do so are “performing the labor that underpins the nation’s economy and maintains families’ health and well-being.”

CBPP backs myriad basic federal policies to fix this problem, including paid leave and federal funding for child care and home health care. Similarly, Oxfam America backs straightforward solutions such as federal funding boosts as well as the passage of the Raise the Wage Act, which would gradually raise the federal minimum wage from $7.25 an hour to $15 an hour—hardly a big ask 10 years after the Fight for Fifteen movement, and already inadequate to meet working people’s needs.

The problem of low wages in the U.S. ought to shock us, in spite of the pro-corporate optimism about the economy and the media’s refusal to amplify the problem. The solutions are obvious, easy, and hardly radical.

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Sonali Kolhatkar is a columnist for Truthdig. She also is the founder, host and producer of “Rising Up With Sonali,” a radio and television show that airs on Pacifica stations KPFK and KPFA and will begin airing on Free Speech TV. She is the former founder, host and producer of KPFK Pacifica’s popular morning drive-time program “Rising Up With Sonali,” based in Los Angeles. She is also the co-director of the Afghan Women’s Mission, a U.S.-based non-profit solidarity organization that funds the social, political, and humanitarian projects of RAWA.

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