The minimum wage issue continues to be a hot topic of debate, here in Oregon as well as elsewhere.
There is a predictable barrage of specific interest-based questions, such as “Will it hurt this or that business?” Let’s be clear: Any business that pays the minimum wage will experience slightly higher labor costs – and that’s the good news!
We urge citizens to step back from the “noise” created by small businesses on one side complaining they’ll go under, and from social justice activists on the other pointing out the unfairness and inadequacy of the existing minimum wage for the fate of the “working poor.”
Specifically, consider the question: What is this whole issue about, philosophically? Cutting through the chaff, it’s about growing inequality. To be sure, minimum wage increases are only one instrument — some argue a blunt instrument indeed — for redressing the obvious and well documented expansion of income and wealth disparity that has swept over this nation for the last three to four decades. We do not need to further chronicle the mountain of data and empirical evidence that has convinced virtually all mainstream economists that this is America’s pre-eminent economic problem. The so-called disappearance of the middle class is noted by politicians and pundits on all sides of the ideological fence.
The problem is simply that wages and salaries, since the 1970s, have not kept up with productivity of the American work force, resulting in an increasing share of revenues going to management salaries and owners. Workers have not been paid the return that their productivity improvement has earned, a situation that violates a time-honored free market economic principle: All factors of production must be compensated according to their actual contribution to output. Anything else is an inefficient distortion of free market capitalism.
For clarity, imagine that instead of arguing for a higher minimum wage, supporters sought to pass legislation mandating a lower maximum wage. It’s really the same argument: Tighten up the wage distribution – it’s too broad. Those at the top are doing very well, and those at the bottom are really struggling, and it would be a much better, more humane and more sustainable country if that weren’t the case. This is the crux of the support for a higher minimum wage, albeit one of many steps that could be taken, and we don’t think that can be refuted.
But meanwhile the devil is in the details, especially legislatively. And individual firms, mostly small businesses, would have to pay slightly higher wages. And this returns us to our starting point – the good news is that the lowest income people will have higher salaries – and will be spending more in their local economies. This is undoubtedly the reason that the predicted unemployment effects have never empirically shown up.
And before we feel too sorry for some business that doesn’t want to see an increase – or would even like minimum wage laws completely repealed – consider that by paying something below a living wage, a burden is necessarily shifted to various forms of public support for many of these people (Think Walmart…). Thus, a low wage is subsidized by taxes for all of us. And many who oppose higher minimum wages also vocally oppose higher taxes! And that seems patently unfair.
Salem Weekly editorial board members:
Russ Beaton, Jim Scheppke, William Smaldone, Naseem Rakha, A.P. Walther.