Research Notes #10
The Wedge of Minimum Wage
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Wedges
Rich white dudes have really done a number on us. They have worked tirelessly to convince us that we should hate each other for every perceived difference while casually sitting atop their pedestals, free from criticism believing themselves to be above reproach. They continuously use wedge issues to feed the isms of racism, sexism, and classism (to name a few) that cause us to shift our focus away from long-lasting collective action. Meanwhile, the twin myths of the bootstrap millionaire and the American dream work in cahoots with the wedges and isms, cultivating people content to stay mad at each other rather than collectively focusing our ire toward them - the rich white dudes. As such, they stay in power and we continue to struggle.
In this week’s newsletter, we will focus on one of the wedge issues that is a major player in the rich white dude playbook - the minimum wage. Thank you for joining me on this newsletter journey! If you enjoy what you have been reading, please be sure to share this post with a friend or ten. New readers are always welcome.
Minimum wage
As I was perusing the recent job postings in the library field, as I have done every week for the past 5 years since receiving my MLS, I came across a listing for an Assistant Librarian position at the Buffalo History Museum. This particular post caught my eye because it is highly rare for jobs to be posted in Buffalo, NY in the library field. As I scrolled down the posting I noticed the wage and was sorely disappointed.
Keep in mind, Assistant Librarians, even at entry-level, require a Master's degree in Library Science. This means that just to be considered you have to have completed a minimum of 6 years in higher education. SIX YEARS. This time in a bachelor's and master's program will accrue debt for the student which should be able to be paid back over time at a position in the field. So, then, can anyone out there tell me why the starting pay range for an Assistant Librarian would be $28,000-$32,000/year?
The numbers
Let me break down the numbers. $28,000 = $13.46/hour, assuming that you will only be working 40 hours per week (which we all know is not the case in any industry.) At the top end — $32,000 = $15.38/hour — again, assuming a 40-hour workweek. Seriously?
New York State has a minimum wage of $12.50/hour, which overrides the horribly low Federal minimum wage discussed below, but that means that someone who is required to have a Masters level degree will be making only 96 cents more per hour than someone who does not require that additional 6 years of education. Does this make sense? Is this an issue at the organization, State, or Federal level, or a combination of forces working together to keep the minimum wage low so that the owners can continue to profit off the backs of low-wage workers?
Yes - this is a post about Capitalism and the minimum wage and how the owners (the bourgeoisie) have, over time, convinced the rest of us (the proletariat), that wages should remain at or below the poverty line. Get ready - these ideas are indeed Marxist, but you should not denounce them as being Communist. Marx was critiquing a system that existed in the 19th century and has persisted to this day. He was not without personal flaws and his critiques reflected an ethnocentric view of Europe at the time, but his ideas can be used to focus thought on the issues that we face today in the United States.
The profiteers
When we consider that the ultra-rich (top 1%) in the United States control about as much wealth as the bottom 90% combined (CITATION), we can see why they would want to maintain low wages. Low wages make them money. Lots and lots of money. So by convincing the workers that jobs will disappear if the minimum wage is increased, they are being disingenuous. They have plenty of money to maintain the same level of workers at slightly higher pay, but they just aren't willing to give up any of the interest on their accounts to do so. They have rigged the system in their favor and they continue to lobby to keep wages low so that workers will be afraid to ask for more. This is how the rich stay rich.
This brings us to the minimum wage. Why is it so low and when will it rise? When it does rise, will jobs like the above also rise or will they maintain the minimum wage salary at $15/hour? How can people who have 6 years of additional course work beyond high school only be valued at what SHOULD be the minimum wage? How have our standards in the United States been placed so low?
Workers right to a fair wage
Currently, the federal minimum wage rate is $7.25/hour. Some states have raised their minimum wage rates in order to better serve the citizens, as shown above for NYS, while many others stay in line with this low rate. $7.25/hour works out to $15,080/year if one is working the standard 40-hour workweek. Again - 40 hours is a pipe dream in the United States as there are very few if any, workers who still only work 40 hours per week. Hourly workers at least have the benefit of overtime pay and that forces owners to cut their hours before they reach that mark, but with the wages so low, most minimum-wage employees have to work 2 or 3 jobs and put in upwards of 70+ hours per week to make ends meet.
Knowing all of the above, let us look at the trajectory of minimum wage, over time, in the United States. We know that minimum wage has not been increased in the last 20 years, but what was the rate of increase prior to that stall?
The beginning
The creation of the national minimum wage was included in the Fair Labors Standard Act (FLSA) of 1938, in order to “stabilize the post-depression economy” (Cornell Law School, LII, Minimum Wage). The FLSA was an excellent act that included other important things such as overtime pay for workers and the restriction of child labor. At the time, the rate was $0.25 per hour and it has steadily increased every 3-5 years since then, until 2009. For exact figures, see the History of Federal Minimum Wage Rates under the Fair Labor Standards Act, 1938-2009 page on the US Department of Labor site. The chart on this page shows the steady increase that occurred and how the minimum wage generally kept up with inflation, until 2009 when corporate lobbying started paying off for the owners in that they successfully ended these increases. And this brings us to the current, $7.25/hour wage which is, by all standards, no longer a living wage.
The federal standard for a living (or livable) wage is $45,000 per year for a family of four (MIT Living Wage Calculator.) There is also fluctuation in that number based on the area of the country you live in, but $45,000 is the standard average, or bare minimum, for the majority of the United States. This figure is higher than the poverty level, which was reset in 2020, by the Department of Health and Human Services, to $26,200. If $45,000 for a family of four is considered the minimum livable wage and the poverty level is $26,200, but the minimum wage is still set at $15,080 per year, this is one of the main reasons for wage disparity and the lack of long term stability for millions of families in the United States. Thinking in terms of that livable wage, the job I mentioned at the top wouldn’t even qualify, since the annual salary even at the top of the range is well below that at $32,000. In fact, this job just barely makes it over the poverty line threshold at the lower end ($28,000).
Solutions
Knowing what we know - based on the data above - how do we fix the problem of low pay in the United States? The best solution would be to raise the minimum wage to $21.63 immediately. This would bring all minimum wage workers up to the livable wage of $45,000/year. The second best, but still better than doing nothing solution would be to raise the minimum wage to $15.00 immediately and then continue to raise it $1.00 each year, over the next 5 years until it reaches $20.00. After that, we should continue to increase it every 3-5 years, for inflation, as we did in the previous 70 years prior to 2009.
In addition to the increased wage, all workers should be made eligible for minimum wage. As if the $7.25/hour minimum wage wasn’t disgusting enough, there is also a loophole for employers to pay employees less than minimum wage if they are considered tipped workers. This ‘tip wage’ is currently set at the federal level at $2.13/hour and needs to be amended to bring ALL workers, no matter the industry or the gross profits of the company, up to the current minimum wage pay rate. Some states have already raised the tip wage, but there are still 16 states where if you are in the service industry, you will likely be making $2.13/hour and have to hope that you don’t get a slow shift or shitty customers that don’t understand the value of tipping. The United States should follow in the footsteps of Canada and give service workers full hourly pay, leaving tips to work as bonuses rather than the income that is relied upon. No worker in the United States should ever be made to work for less than the minimum, living wage.
I can hear the screams of the owners right now. “Oh no! You want to do WHAT? You want us to pay our employees a LIVING wage? But oh - how can we do that?” Right - because if they did that, they wouldn’t be able to remain mega-rich. Corporations have plenty of money to pay their workers a living wage. Amazon, Walmart, Target, and the like can fully afford to pay hourly workers enough to not be below the poverty line so they can thrive rather than just barely survive, but they have successfully lobbied the government to not raise the minimum wage. Citizens United v. FEC was one of the major victories of corporations that gave owners the right to lobby on their own behalf with no penalties, union bust without much oversight at the federal level, and continue raking in the dough while their employees have to work 2 or 3 jobs to just make ends meet.
Don’t fall for their bullshit
The owners of major corporations will continue to push the false narrative that businesses will go under if they have to pay a higher minimum wage. They will use small businesses as a scapegoat for these claims stating that those businesses will suffer under this higher minimum wage, but small businesses would actually benefit from the increase since more people would be able to buy the products that they sell, therefore offsetting the payroll costs incurred (Center for American Progress.) For big businesses, the increase in profit over the past 12 years and, for Amazon especially, the extreme profit increase in 2020 alone, would more than cover the minimum wage increase. Don’t be fooled by the owner’s thirst for continued mega-wealth.
Another tactic that corporate moguls like to trot out whenever the minimum wage discussion begins is the ‘people will lose their jobs to downsizing’ trope. In reality, minimum wage workers will actually be able to work just 1 job, instead of the 2 or 3 they are currently holding, which would result in natural attrition of the workforce. Corporate bigwigs will save money as workers are able to right-size their work-life balance and so, although it isn’t the best-case scenario, big business will still make out in the end.
Honestly, no matter what happens here, the billionaires that own the large corporations will always turn a profit. Raising the minimum wage won’t change that. But what will change is the state of workers in the United States. It will bring peace of mind and better health to the workers who actually keep this country running. And, in the end, that is worth everything.
Fun research fact of the day
$100 in 1938 is worth $1,878.56 today
Citation: CPI Inflation Calculator
Thank you for reading the Research Notes Newsletter! Now it’s YOUR turn. Do you have a resource you would like to share? A favourite statistic or economic quip you are itching to let me know about? If so, please share along with any other questions or suggestions for future research, in the comments. I look forward to lively discourse.