The president ignited a controversy in his state of the union speech by saying he wants to raise the minimum wage by $1.50, to $9 an hour. He argued that it is shameful that someone working full-time for the current minimum wage of $7.25 would still be below the poverty line.
Fast-food relies on minimum-wage workers, which explains why McDonald’s stock fell after Obama announced his plan. (Photograph: Alex Segre / Alamy)
Opponents — led by Speaker of the House John Boehner and an endless cadre of mustache-twirling corporate leaders and overpaid Washington think-tankers — have said they oppose the president’s plans. They argue that employers forced to pay a higher minimum wage will just hire fewer people to work full-time, that the promise of economic progress from higher pay is illusory, and that a boost in the minimum wage rarely translates to an uptick in economic activity.
These are empty threats, and spurious ones.
The issue about minimum wage, for instance, has almost nothing to do with full-time workers and whether they get hired or not. Only 5.2% of hourly workers are paid minimum wage or below. That’s 3.8 million people. It is true that affecting the pay of such a small number of people won’t solve America’s increasing problems of poverty or income inequality by itself.
But what happens when you look at part-time workers? Then you understand how craven it is to deny workers minimum wage.
There are 8 million workers who are working part-time due to economic reasons, according to the Bureau of Labor Statistics. That means that they want to work full-time, but can’t. There are also 18.7 million workers who are part-time out of choice, or for “non-economic reasons”.
Those part-time workers are where poverty ends up concentrated, and where the minimum wage will make the most impact.
Part-time workers are much more likely to end up working for minimum wage, according to the BLS’s analysis. Fast-food makes up a decent portion of minimum-wage jobs — that’s why McDonald’s stock fell the most after the president announced his plan — and those workers tend to be older and less likely to be able to find jobs elsewhere. They have no economic leverage.
These part-time, minimum-wage workers also tend to include people who may be working multiple jobs to make ends meet. No matter what they do, they will end up below the poverty line. In December, Bloomberg reported the story of Tyree Johnson, a homeless man who used his two part-time, minimum-wage jobs at McDonalds to pay for a nightly room at a single-occupancy hotel. He’s been working for two decades and still can’t get the hours necessary to make his work full-time. He scrubs with soap in the sink each day because, he told Bloomberg, “I hate when my boss tells me she won’t give me a raise because she can smell me.” Johnson is just one story of many, obviously.
So when corporate leaders talk about how the minimum wage won’t pull people up from the poverty line, they’re right: many companies that rely on minimum-wage workers, from McDonald’s to Walmart, have already figured out how to treat their workers as commodities, and poverty is now built into the system because of that. In a longtime period of joblessness like the one we’re living through, people will take whatever job they can get.
But there is an intellectual dishonesty here too, as well as a craven contribution to the country’s economic woes. Corporate leaders shouldn’t have to be told by the government to pay their workers a living wage. They know that consumers will drive the recovery, but consumption by the rich doesn’t do it. You need the middle and lower classes.
So when those corporate leaders resort to threats to hold workers hostage — citing numbers about how raising the minimum wage by $1.50 will cause them to fire people — they should take a step back and look at some other numbers.
Try this number, for instance: Over one in five American children is living in poverty. There are others, but are they really necessary? This is the world’s leading country and 20% of children are part of families that can barely find money to eat.
Aside from the numbers, there is the issue of image. There is something truly grotesque about corporate leaders who earn millions of dollars — or even hundreds of thousands of dollars — arguing over paying their workers literally pennies more. Those workers often have to rely on food stamps or government welfare programs to make up the difference. Meanwhile, company CEOs have barely received a cut in pay for years, and on average they make 231 times as much as the average worker. That’s a lot of money, obviously. So the idea that paying $1.50 an hour more in minimum wage would break their companies and force them to save on costs is patently ridiculous. The first and most obvious cost they would have to think about cutting would be their own pay packages. What if those CEOs made, say, only 200 times the average worker? Or 100 times? One suspects their companies could afford that uptick for poorer workers then.
Most of all, the insistence of business leaders on a lower minimum wage looks, to any other country, completely revolting. It is a Dickensian image of corporate callousness, and it comes just when Corporate America is trying to dig out from its image hole of appearing unconscionable and dastardly.
Business leaders and plump Washington lawmakers would do well to try to step back from their fat bank accounts and their sense of entitlement and put themselves in the shoes of someone who works part-time just to be able to afford food to eat and a bed for the night. Is that the America they want to create? Because keeping poor people down so that they can’t even dream of being middle-class seem like a full-time task — although it seems to pay those corporate leaders a lot more than minimum wage.
