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Happy Holidays and Minimum Wage Blues from Scrooge Inc.

Bill DiBenedetto | Tuesday December 24th, 2013 | 3 Comments

raisetheminimumwage_pbarcasScrooge is alive and bah-humbugging better than ever this Holiday Season in much of corporate America and the Republican Party—especially when it comes to the minimum wage wars. But, unlike the conclusion of Dickens’ A Christmas Carol, no redemptive change of heart is at hand.

An HBR Blog item last week by Peter Cappelli notes it was not all that long ago that companies worried about whether their employee practices were fair. “One of the functions of human resource departments was to advocate for the interests of employees.”

Times have certainly changed. Shareholder activism as well as court cases sympathetic to shareholder interests have meant that the vast majority of companies pay more attention to maximizing stock prices, often at the expense of their employees.

“Let’s be clear about the wage levels that are associated with not having enough to eat,” Cappelli writes. “A family of four with one breadwinner is eligible for food stamps if they earn less than $2500 per month. That is the equivalent of a $15 per hour job and a 40 hour work week.” By the way the food stamp program is one of the “safety net” programs that Republicans want to eviscerate.

But a $15 per hour wage is generally seen these days as a good wage. Perhaps a family can scrape by on that, but be honest: could you?

Even more concerning though are the jobs that pay at or about the federal minimum wage of $7.25 per hour, or $1150 per month full time. The minimum has been at that level since 2009. Under that wage—less than $14,000 a year—a family of four that depends on a single earner is living way below the poverty line, and needs federal assistance for food, housing and healthcare—assistance that Republicans want to cut drastically or eliminate.

“One of the things that I find surprising is how many companies that pay poverty-level wages or thereabouts to their employees spend a good deal of effort to be good corporate citizens in other areas,” Cappelli says. “They try to make their operations ‘green,’ lessening their impact on the environment, some even sponsor anti-poverty programs in Africa, and so forth. They just don’t seem very interested in the poverty among their own workforces.”

Author Steve Coll also addressed this parlous situation in a recent New Yorker piece: “Earlier this year, fast-food workers nationwide went on strike for higher pay. This holiday season, activists have been excoriating Walmart because one of its stores organized a charitable food drive for its own low-paid employees. McDonald’s was taken to task for suggesting, on a company website, that strapped employees could raise cash for presents by selling belongings on eBay.”

In the article, Coll recounts the story of Sea-Tac, WA, a city of 27,000 located near Seattle, whose major claim to fame is Seattle-Tacoma International Airport. Earlier this year, Sea-Tac residents, aided by outside labor organizers, put forward a ballot initiative — Proposition 1 — to raise the local minimum wage for some airport and hotel workers, including baggage handlers, to $15.00 an hour. That would be the highest minimum wage in the country, by about 50 percent. Business groups and labor activists spent almost $2 million dollars on television ads, mailings, and door-to-door canvasses opposing Proposition 1, spending about $300 per eventual voter. The region’s only major daily newspaper, The Seattle Times, opposed it. But incredibly, the measure passed by a margin of 77 votes.

A reversal after a recount is possible. But the surprising result is heartening – perhaps the grassroots left is finding its feet after all, after the post-Occupy malaise.

President Obama has endorsed a target minimum wage of $10.00. Congress, with Republicans in full-cry opposition, makes passage unlikely. This means that local campaigns to raise the minimum wage, such as in Sea-Tac and in 20 other states, are the best hope for relief.

Cappelli sums it best, “Employees have human rights that do not disappear when they enter the workplace.

“If you are a member of the board of directors of a company that pays its workers so little that they need government subsidies to survive, isn’t that a little embarrassing? Most of these companies want to refer to themselves and their employees as a kind of family, but what kind of family allows its members to go hungry? And what prevents you from doing something about it?”

Here’s what should be an obvious bottom line to Wall Street, to corporate America and the Republican Party: there is dignity in work and someone who works full time should not be at risk of poverty.

It’s no accident that the 3Ps put people first.

[Image: Raise the minimum wage 3 by pbarcas via Flickr cc]


▼▼▼      3 Comments     ▼▼▼

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  • http://www.triplepundit.com Nick Aster

    The Economist has a good piece on this from this week: http://www.economist.com/news/united-states/21591616-americas-minimum-wage-debate-has-rolled-round-again-raising-floor?zid=309&ah=80dcf288b8561b012f603b9fd9577f0e

    (requires reg)

    Bottom line is there are *some* good reasons to have a low minimum wage or exceptions to it, but even a conservative analysis shows raising the US wage to something like $11 would not cause harm to the labor market. They suggest the best way to handle it, however, is to put the decision into the hands of regular analysts and not politicians so it goes up slowly from time to time and not in big chunks…

    • ssj12

      It would damage the labor market greatly.. anyone who doubts it is a failure at basic economics.

      The reason the prices are high is due to regulations. Removing regulations on industry, trade, etc would decrease prices.

      • http://www.triplepundit.com Nick Aster

        What would damage the labor market? A higher minimum wage? Did you read the article?