Slavery By Another Name

State Sen. Kimberly Lightford’s SB1565, which she first filed in February of 2011, gained some traction in the wake of Gov. Pat Quinn’s State of the State address last month. In the speech, the Governor called for the Illinois minimum wage to be increased from its current level of $8.25 an hour, the fourth-highest level in the country, to $10.00 an hour. The move would make Illinoisians the highest minimum wage earners in the country.

According to Lightford’s office, SB1565 would restore the minimum wage to its 1968 level in terms of spending power, remove the differences between tipped and untipped workers, get rid of distinctions in age and ensure “that all non-family-member employees are paid at least the minimum wage.” Since the Senator believes that implementing the plan too hastily might put small businesses in a bind, her plan raises wages gradually by $0.50 a year (adjusted for inflation) until the new low is set.

The minimum wage has gotten significant public attention since President Obama’s call last month, in his State of the Union Address, for an increase in the national minimum wage from $7.25 an hour to $9.00 an hour, $0.50 short of the level he promised to fight for back in 2008.  Most recently (and most boldly), U.S. Senator Elizabeth Warren suggested increasing the national minimum wage to $22 an hour.

All this talk of increase, however, seems wildly radical to most conservatives and has provoked the customary apoplexy, particularly among people whose livelihoods generally don’t rely on standing up all day, or bending over, or kneeling down, or moving stuff… “‘Bad idea!’” said Gregory Baise, president and CEO of the Illinois Manufactures’ Association, in an email to Crain’s Chicago Business. He believes that “‘our leaders should concentrate on creating jobs that pay much better than $10 an hour.’” David Vite, president and CEO of the Illinois Retail Merchant’s Association predicted that, “People are going to be displaced, businesses are going to be shut down.”

The actual evidence doesn’t matter to executives who make these kind of arguments. It doesn’t take an economist (sometimes it seems like it takes anybody but an economist) to know that American workers have been shafted. And it only takes a quick scansion of the data and a little knowledge of history to realize that, as Sid Mohn, President of the Heartland Alliance for Human Needs and Human Rights, states explicitly, “raising the minimum wage isn’t bad for business.”

John Kenneth Galbraith, one of those rare economists who considered actual people in his economic thinking, wrote in The Affluent Society (1958), that, “The most impressive increases in output in the history of both the United States and other western countries have occurred since men began to concern themselves with reducing the risks of the competitive system.” In other words, measures like a minimum wage, Social Security and national healthcare, are not bad for business – they’re a boon to business. However, they’re bad for the collective psychology of today’s executive class, which is programmed to cut wages to as low a level as it can get away with – even when such trimming isn’t necessary. A quick glance at the chart below tells some of the story.

min-wage1-fig2-2012-03

Our chronic underpayment persists despite the fact that American workers have, for a very long time, been among the most productive in the world. If workers were paid even marginally what we’re worth, Sen. Warren’s $22 minimum wouldn’t seem so astronomical. That it does, even to some of the very workers to whom that wage should be a birthright, reveals a much deeper truth.

It’s within the nature of wage labor to exploit the laborer, which makes the very idea of a ‘living wage’ rather contradictory. This exploitation doesn’t necessarily happen by malicious design or conspiracy. It’s actually pretty mundane. In a market transaction, one party sensibly wants to gain as much upside in exchange for as little downside as possible. And each party wants leverage over the other. In the case of a corporation, this leverage is capital (i.e., a check). In the case of a worker, this leverage is his or her work (i.e., factors that are much more valuable than a check – time and energy).

As a result of global labor competition, labor-saving technologies and the weakening of unions (among other forces), the leverage of workers has become miniscule compared to that of companies (as if it were very sizable in comparison to begin with). And companies aren’t going to go easy in their quest to buy labor as cheaply as possible simply because laborers are going hungry. It’s not hard to imagine why this is the case. Why would I willingly pay $2 for a double cheeseburger (despite McDonald’s reasoning for hiking the price) after it’s been $0.99 for so long? As it is for the McDonald’s patron and his cheeseburger, so it is for the business and its hired labor.

The reason the government instituted a federal minimum wage in the first place was because it couldn’t rely on businesses to act humanely on their own. It’s the nature of business in a hyper-competitive, weakly-regulated market economy, divorced from any other motives besides making money, to offer as little as possible in return for your absolute loyalty. The motto in such an environment is, ‘Hire people only when they’re absolutely needed and get them for free, if you can.”

As long as work is owned by people other than workers themselves, there will never be a minimum wage that’s high enough. As a temporary palliative to the chronic condition of wage slavery, a minimum wage has its place. But it doesn’t begin to resemble a cure. ‘What, then,’ you may ask, ‘does a cure look like?’ Follow this link for an idea.

2 thoughts on “Slavery By Another Name”

  1. Hey everyone, let’s all drop out of school. Senator Warren is going to fight to get us a minimum of $22 per hour! Who needs an education, training, or skills!

    1. Hey John, thanks for reading and engaging. I really appreciate it. I was drawn to your comments b/c a) they imply that a $22 minimum wage will be a disincentive for workers to gain more skills, education and training, and b) that the skills, education and training of workers correlate positively with pay. I’m currently in the middle of a pretty definitive work that explores the validity of this correlation entitled Created Unequal (1999, 2000) by James K. Galbraith (son of John). I plan on incorporating some of the book’s analyses into my own writings in the future. You should take a look at it.

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