For one thing, companies should not be able to lean on taxpayers to compensate their employees
June 19, 2014 12:00 AM
By Richard A. Karlin
Sen. Pat Toomey sees no need for a minimum wage and says: “The vast majority of people who start in a minimum-wage job, if they show up and put in an honest day’s work, they’ll get a raise … ” He went from Harvard to Chemical Bank to Morgan-Grenfell to Congress, so Mr. Toomey may never understand the need for a fair minimum wage.
Joe Sestak, a former admiral and congressman who ran against Mr. Toomey in 2010 and is preparing to again, supports an increase in the federal minimum wage, having voted in 2007 to raise it by $1.40 to $7.25 an hour: “I did so recognizing an important fact: This first increase of the minimum wage in 10 years was still less than the minimum wage in 1968 when adjusted for inflation ($10.69).”
Politicians on both sides of the aisle have recognized the importance of the federal minimum wage. In 1933, Democratic President Franklin Delano Roosevelt said: “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” Former Massachusetts Gov. Mitt Romney and former Pennsylvania Sen. Rick Santorum, both Republicans, recently said they support an increase in the minimum wage.
Competition for highly skilled workers assures them of a living wage. Persons who clean, arrange, stock, pick, pack, fetch, carry or farm have no such assurance. There aren’t enough of these jobs for the people who need them, so they often pay less than a living wage.
Americans are driven by cultural and religious values, so, rather than watch children starve and family members suffer for lack of medical attention, we provide safety-net support through our taxes. Low-pay employers rely on this. They are conning taxpayers into paying their workers.
According to the University of California, Berkeley Labor Center, U.S. taxpayers are being fleeced of $240 billion annually in this way. If the government paid $240 billion of your labor costs and let you keep the profit, wouldn’t you try to prevent change?
These thieves shout: “Prices will rise; stores will close; jobs will be lost!” Prices may rise a bit, but demands on tax dollars could fall a lot, and our governments are going broke.
Competition helps keep down prices. Stores open and stores close, but supporting marginal stores is not a taxpayer responsibility.
Jobs would be created by raising the minimum wage, not lost, because the added money flowing to workers would be high-velocity money, rapidly spent for food, rent, clothes, health and education. It would boost the entire economy.
This boost would be more useful to society than continuing the share-price boost that results from suppressing wages. This share-price boost cheats taxpayers because it forces tax money to be spent in compassionate relief for companies’ employees.
Washington, D.C., and 22 states have minimum wages higher than the federal $7.25, yet they have not suffered job losses. If the federal minimum wage in 1968 were adjusted for inflation, today it would be $10.69. Respected studies show that if the minimum wage does not exceed 50 percent of the average hourly wage, which is now about $24.38, people will not lose their jobs.
Most companies do not make their lowest wage a living wage because corporate officers receive humongous rewards for boosting share prices, which respond to profit. The easiest, fastest way to boost profit is to suppress wages, which also avoids sweaty tasks such as finding new customers or developing new products. This cheats almost everyone but fills the wallets of Kochs, Waltons and the like.
Competition has made the United States incredibly productive. The function of a minimum wage law is to ensure living wages without tipping the competitive playing field. The minimum applies to every employer, so what incentive would any individual employer have to reduce jobs, given that all competitors also would have to absorb an increase in the minimum wage or raise prices?
Retail and service employers especially need low-wage workers to keep our stores clean and neat, wait our tables, weed our farms and keep our goods moving, our factories producing and our gas and electricity flowing.
The Great Atlantic and Pacific Tea Co. tried to skimp on low-wage workers and went from Walmart scale to almost vanishing because of dirty, unorganized stores. Each store had enough detergent to clean its entire zip code but too few hands to organize the shelves and mop the floors. Buyers found other stores.
Mr. Toomey should return to the corporate world where he is so at home. Mr. Sestak should be allowed to help pass a phased-in increase of the federal minimum wage that provides automatic cost-of-living adjustments and tiered rates for teens and special cases.
Richard A. Karlin is a computer services consultant andlives in Squirrel Hill (firstname.lastname@example.org).
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