Unhappy Anniversaries

Some anniversaries worth noting this week begin, of course, with Tiananmen Square. It's odd to think that these days all Beijing and Washington appear willing to argue about is air pollution, but there was a time when we had wider ethical chasms to cross. Free trade makes strange bedfellows of us all (although soverign debt imbalances may produce opposte effects). You can be forgiven if you have forgotten to mark June 4 on your mainland calendar, where the date is hurried past with merely the traditional march of the party's cybercensors. It is commemorated slightly more aggressively in Hong Kong, where almost 200 thousand turned out for a remembrance vigil, and other less surpervised outposts of the Chinese empire.


And belated note also of the June 4 100th anniversary of the minimum wage. It would be gratifying if this centennial marked the arrival of the minimum as a just or a living wage. Unfortunately it is now at a more than 50 year low in purchasing power. Christine Owens, executive director, National Employment Law Project reminds us that the first minimum wage law in the United States was established on June 4, 1912 in Massachusetts. (I don't believe the Romneys had anything to do with this particular groundbreaking social legislation.) The current federal minimum stands at $7.25 an hour, just over $15k a year. Owens reports that more than two-thirds of Americans support raising the minimum wage to over $10 per hour and many think it should be maintained with automatic cost of living adjustments. Right now it can only be changed by an act of Congress. That's tough going when workers are confronted by a Congress that is unwilling to act.

Owens shares her thoughts on the importance of the minimum wage at The Hill:

Today, 100 years after the first minimum wage law was passed, low-wage industries once again threaten to impoverish America’s workforce and derail the entrepreneurial ambitions of small business owners. .... There was nothing inevitable about the low-wage economy that we find in the U.S. today. What decades of experience tell us, however, is that unless we seriously acknowledge our responsibility to maintain the value of the minimum wage, we have little reason to expect anything different in the century ahead.

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Tim Huegerich
6 years 9 months ago
Raising the minimum wage is just not an effective way to benefit the poor. If a worker has low skills, mandating a higher wage is not going to necessarily increase their wages - if it doesn't eliminate the job, it often leads employers to hire middle class teenagers instead. Why would you ever favor that over increasing the EITC or subsidizing health insurance? It's simply an illusion that raising the minimum wage has no cost to anyone - if that cost fell on the well-off, it would be an effective policy, but it just doesn't when you study the effects.

I wrote this to try to explain the big picture on this from a Catholic perspective. We can and *should* ensure just, living wages but not through minimum wage laws - there are better ways to do it: http://humandoctrine.wikia.com/wiki/Just_Wages
Stanley Kopacz
6 years 9 months ago
There are advanced countries like Sweden and Germany that have no legislated minimum wage but they DO have collective bargaining which is nearly moribund in our oligarchy.  Just because someone doesn't have develoed skills doesn't mean they don't work hard and deserve just compensation.
The development of skills like computer skills does not guarantee good compensation when you can hire Hindi in Hyderabad over the internet.  The great changes of the last century were made by men who mostly never became billionaires or even millionaires.  Einstein, Crick, Heisenberg, Turing, Van Neumann.  They were the real job creators.  Compensation doesn't match contribution by any means.  Consider the wall Street trash who are generously compensated no matter how many trillions go away..
Stanley Kopacz
6 years 9 months ago
One more thing.  There is no such thing as an unskilled worker or human being.  Except for the profoundly impaired, we all have the ability to understand and initiate speech.  We have amazingly dexterous and complex hand/eye coordination and a remarkable panoply of cognitive and perceptual skills. Just because these cognitive and physical skills are common, doesn't make them less miraculous.  We are all skilled.
Tom Maher
6 years 9 months ago
A minimum wage implies a significant loss of needed jobs at lower wages.  One of the reasons we have chronic double-digit unemployment of teenages and young adults is there are way too few jobs available for people who by definition do not as yet have any skills,  experience or track record to allow them to seek better paying jobs.  Our unwise labor  policies have made the first step on the employment ladder five miles high.  Getting the first job and gaining acces to the job market for the youth of our society has been pushed back back indefinately.  Society is failing to providing the needed first job opportunities by insisting that everyone be paid a minimum amount with no exemptions for lack of skill or experience.  Jobs to begin a career are lost. 

How does it help anyone let alone the poor to have no jobs available afor people with no skills or expereince an unitntended consequences of minimum wage law?   And rasing the minimum wage only will cause more job losses.   This is failed social engineering that failed to consider all the economic forces at work.   People critically need to have a first job to gain access and participate in the job market before they need to worry about increases in minimum wages.  We are talking about a very large youth segment of the population rich or poor that the whole economy depend on. 
Tim Huegerich
6 years 9 months ago
Tom Maher, I am not convinced that the minimum wage at the current U.S. level has the effects you claim (as evidenced by the very small percentage of jobs that literally pay the minimum wage, around 1%), though such effects could materialize with a higher minimum wage. (The dearth of jobs right now is rather due to a lack of aggregate demand brought about by the financial crisis and perpetuated by political opposition to stimulus.)

Stanley P. Kopacz, I endorse both your reverence at the wonder of man and the moral judgment that all (and certainly all willing to work) are due sufficient income to live a dignified life. However, I argued above that mandating a minimum price for an hour of work is not an effective way for our society to guarantee this standard.

A business will only hire another employee if the contribution of that employee to revenues the business can bring is more than the amount they need to pay the employee. (For a straightforward example, imagine a non-profit's development office deciding whether to hire another person to call potential donors.) What if we put the minimum wage at a level such that some workers cannot find a position for which this is the case? Wage determination is complex, but this very basic logic is underlying the number of jobs available.

You can of course argue that higher wages is worth the tradeoff that some will be left without any work at all. But why make that tradeoff when there are better alternatives for providing a living income for everyone?


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