The Minimum Wage and the Big Picture

Jonathan Chenjeri develops a well-studied picture of the minimum wage as it could apply to small employers. He puts a lot of thought into the economics involved in studying the market conditions that affect the small mom-and-pop proprietor, which are quite different from those of MegaCorp, Inc.

We have to understand and recognize that these market conditions which allegedly affect the minimum wage involve not only the size of the enterprise, but also the regional locale and local costs of living. We recognize that the Fight For $15 campaign being fought by low wage earners everywhere is a necessary first step towards improving the lot of the lowest strata of the American working class. Nevertheless, it certainly is inadequate in some of the more expensive labor markets of the nation.

Simple mathematics illustrates this. The 2014 poverty level established by the Federal Department of Health and Human Services for a family of four is $23,850 a year. A worker making the current federal minimum wage of $7.25 an hour for 40 hours a week and 50 weeks a year will gross $14,500 — shamefully inadequate by any definition. Even an employee earning $15 an hour for 40 hours a week and 50 weeks a year will only gross $30,000. A net paycheck allowing for income tax, social security, and Medicare deductions on the average will allow a rough take-home amount of $25,550 — barely above the poverty line.

It is obvious that a pure and simple “minimum” wage just won’t cut the proverbial mustard. For example, effective January 1 of this year, 20 states raised their minimum wage. In liberal states like Washington State where the minimum wage was raised to $9.47 an hour, we still have a resultant yearly income of less than the poverty level. What is required by the working poor is a living wage, which is a standard more clearly delineated according to local market conditions.

Consider the Universal Living Wage Formula developed by the Department of Housing and Urban Development, which allocates not more than 30 percent of one’s income for housing. The formula suggests that even the $15 an hour scale would result in economic drowning in Manhattan, where the monthly median price of a two-bedroom rental apartment is $4042. The situation is the same in Los Angeles and Chicago, where rental medians are $2377 and $2153 respectively. One might be able to tread water in Austin at $1375. In Birmingham, Alabama, the median rent of $761 exemplifies a market that could best accommodate a living wage of $15 an hour.

One of the cardinal sins of the American economic system is that working people are defined by how much money they make. Yet, corporate greed has reduced the humanity and lives of working people to a simple line item in corporate ledgers. By supporting wage campaigns, we defend the dignity and rights of workers everywhere.

As socialists, we ultimately believe in the abolition of the wage system. We also realistically recognize that we will have to achieve those transitional demands which lead to the redistribution of wealth towards the needs of the people who produce that wealth. An easy first measure for wealth redistribution is higher wages. Higher wages can be achieved by guaranteeing a minimum living wage based on local market conditions. The Fight for $15 campaign is a step towards the guaranteed minimum living wage.

Let’s take one more, easy step. The government’s criteria used for determining poverty and a universal living wage should be developed to determine a minimum wage scale sensitive to local economics and business size. Additionally, these standards should be given the force of law.

We can expect increasing hostility in this regard from corporate America and their Republican lackeys. Already there is talk from newly elected governor of Texas Greg Abbot of restricting the power of local communities to regulate in areas where state and federal controls have stalled. While Abbott’s reference was specifically directed towards fracking and plastic bag bans, this argument can be applied towards the abolition of minimum wage rates within local jurisdictions. Expect to see legislation in this direction in Texas in the months ahead, and we can expect to see it within the entire spectrum of the Koch Brothers-ALEC-Republican Party monolith.

But perhaps most importantly, we should not depend on the government to enact the living wage for us. There is always strength in numbers. The more organized and united people are, the better prepared they will be to gain higher wages. Unions have understood this for decades. We must tell the government what our living needs are. Even while the law will protect labor organizing and organizers, it will be a rough uphill battle as it always has been. While Jonathan Chenjeri advocates individual wage bargaining with small employers, we must recognize that only through organization will we have the strength to increase our wages for all workers.


Steve Rossignol

is Archivist for the Socialist Party USA.

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