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Low Minimum Wage Killing the Middle Class
By Thom Hartmann (about the author) Page 2 of 2 page(s)
Our choice is not between low prices at Wal-- Mart and high prices at Wal-- Mart. It's between low prices at Wal-- Mart with lousy paychecks and no protection for labor, and the prices Wal-- Mart had when Sam Walton ran the company and nearly everything was made in the United States and people had good union jobs and decent paychecks.
The choice is ultimately about whether we want to have a middle class in this country.
The Real Jobs/Salary Equation
Rush Limbaugh tells his listeners that if we raise the minimum wage, small businesses will go under and the country will lose jobs. History tells us that that is nonsense. The reality is that every time the minimum wage gets raised, employment goes up.
For example, when Santa Fe, New Mexico, voted to raise the minimum wage to $9.50, the cons screamed that the economy would go south. It didn't. According to living-- wage advocates Monsignor Jerome Martinez and City Councilor David Coss, the number of recipients of Temporary Aid to Needy Families has fallen 9.7 percent since the wage increase, while in the state as a whole it had gone down only 0.6 percent. Further, they write in ABQjournal.com: We have gained jobs. According to a Sept. 22 report from the New Mexico Department of Labor, 1,400 jobs have been added to the Santa Fe work force since the living wage came into effect. This 2.3 percent rate of job growth is a little more than the state‘s 2.1 percent job growth rate during this same period. Santa Fe‘s 2.3 percent growth rate is very high, as the state‘s job growth, at 2.1 percent, ranked 12th highest in the country.
America has the money. It's just a question of how we use it.
The hospitality industry in Santa Fe did even better, adding 300 jobs, a 3.2 percent growth rate. The unemployment rate in Santa Fe in August was 3.8 percent, down from 4.1 percent a year ago. The Santa Fe rate is much better than the state as a whole, which had 5.3 percent unemployment last month.
A caller to my radio program once offered a good example. He was arguing against raising wages. He posed a problem of an investor who would like to develop property. He asked me, "Would it be better to pay ten carpenters $20 per hour and build one building, or pay twenty carpenters $10 per hour and build two buildings?" Wouldn't it be better for the economy, he said, to employ more people?
The question my caller missed was this: do you want to have a middle class in the community in which you are building? That is, do you want there to be people who can afford to live in your building and shop at the stores you may develop? If the answer is yes, you better pay a living wage and build one building.
431 Times the Rest of Us
Let's turn this question around the other way. Let's ask the cons: would it be better to pay ten executives $100,000 per year and invest the rest of the company's profits in the company and its workers and shareholders; or would it be better to pay ten executives $1 million per year and claim you'd gotten the best leadership money could buy?
The nation's top executives now make an average of $11.8 million per year-- each. That's just their salary; it doesn't count bonuses, perks, stock options, and so forth. For example, the Washington Post tells us in a June 27, 2005, story that many top executives get whatever they ask for. The article cites several examples, among them the case of a health-- care executive: Coventry Health Care Inc., an HMO company, gave chairman and former chief executive Allen F. Wise a deal that includes as much as $12,000 for legal, tax and financial planning, an unspecified automobile allowance, 75 hours of personal airplane use and a "tax equalization bonus" to ensure that those other benefits entail "no net cost to him," according to a regulatory filing.
Why do executives making $11 million per year need an automobile allowance? Can't they pay for their own financial planning?
Even some executives are starting to feel uncomfortable about all this excess. The Post interviewed William W. George, former chief executive of Medtronic Inc. and a member of the boards of such companies as Goldman Sachs and Exxon Mobil, who expressed concern about high executive salaries: "Executives make a lot of money," he told the Post, "so they ought to be able to pay for those things themselves. . . . How far do you want to go? Groceries?"
Executives' pay is now 431 times what their employees make on average ($27,460). United for a Fair Economy writes in its Executive Excess 2005 report: "If the minimum wage had risen as fast as CEO pay since 1990, the lowest paid workers in the U.S. would be earning $23.03 an hour today, not $5.15 an hour."
Our economy has plenty of money, but the money is going to the corporatocracy, to the richest among us, instead of to the millions of people who-- as Abraham Lincoln pointed out-- actually make the country work. A living wage would be a first step toward equalizing this balance and resecuring an American middle class.
But a living wage is just a starting point. Even people making a "living wage" often must work two jobs. To support a middle class in this country, we need universal single-- payer health-- care coverage. We need to strengthen Social Security, not weaken it. We need to offer a free, high-- quality public education.
And one of the best ways we get all that for American workers is by supporting unions.
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