CounterSpin interview with Holly Sklar on minimum wage economics
Janine Jackson: Whether the federal minimum wage should be raised was the first question of the recent Republican presidential candidates’ debate. Unsurprisingly, the responses ranged from no to hell no, but given a media environment in which some pundits claim that there is no wage too low to pay someone, it’s significant that the question even came up.
When you think of the fight to raise the minimum wage, you might think of fast food workers who’ve been at the forefront of the Fight for $15 movement that’s put a higher wage on the agenda in places like Seattle and Los Angeles and here in New York. You don’t, most likely, think of business owners, as media’s standard presentation often pits business owners, with their eyes supposedly on profits, against workers looking to earn enough to live on.
That’s where my guest comes in. Holly Sklar is CEO of Business for a Fair Minimum Wage, and author of, among other titles, Raise the Floor: Wages and Policies that Work for All of Us. She joins us now by phone from Boston. Welcome to CounterSpin, Holly Sklar.
Holly Sklar: Thanks, great to be here.
JJ: Support for raising the minimum wage is seen by some as a call for social policy to trump purely economic reasoning, as if economic policy were ever neutral vis-Ã -vis social goods; but put crudely, it’s seen as workers’ interest versus owners’ interest. So the very existence of your group would seem to complicate that presentation of things.
HS: Well, certainly, and that’s what we intend. There’s a big misunderstanding that there needs to be some kind of a split between business and workers on raising the minimum wage, or on the economics of it, but in fact we are a national network of business owners, executives and business alliances who do believe a fair minimum wage makes good business sense. That’s what we’re about.
JJ: I don’t think that anyone truly believes that Walmart would have to go out of business if they paid workers more; it seems more like an ideological argument that if they can make a squillion dollars, then they are entitled to every penny. But the rhetoric often tells us that it’s the smaller businesses that would suffer, that wouldn’t be able to hire or wouldn’t be able to grow–and that seems to be what you are countering fairly directly.
HS: Yes, in general we know that it is absolutely the case that you cannot build a strong economy on a falling wage floor; and the minimum wage, adjusted for the cost of living, has fallen dramatically–at the federal level, $7.25, is actually lower, adjusted for inflation, than the minimum wage of 1950, and it’s a third lower than 1968. And so you cannot build a strong economy, and you cannot really build a strong business for the long haul, on falling real wages. Most businesses in the country are small businesses, and so by definition most of our members are small businesses, although we have some very large businesses as well, and we have business alliances–for example, the Greater New York Chamber of Commerce, which represents about 30,000 businesses–that support raising the minimum wage.
Small businesses understand very well that workers are also consumers. If there’s not enough money in the wage base of the economy of the people they are hoping will come in and buy their goods and services, they feel that every day. And they also feel very directly what it’s like to have a worker who, if they’re underpaid, if they’re not really earning enough to even keep a roof over head, put food on the table, buy the winter jacket of a growing kid, they’re distracted by this financial stress that’s continual. So they believe very strongly that the workers should earn enough so that they can focus on the business, on the customer, and not be constantly worried about just how are they going to make ends meet, how are they going to make the rent and so on.
JJ: You’ve just talked about the history, and I think it’s interesting–Donald Trump and his ilk seem to connect holding down wages to this idea of “making America great again,” and that’s more than ironic given the actual history.
HS: Yeah, well, my point is that’s a big myth that has been sold. I mean, if cutting wages and cutting benefits and this whole notion that the more you can squeeze out of the workers–at the same time, in the giant corporation, not in the small business but in the bigger corporations, you go in the exact opposite way; you have more and more of the revenue of the company going to fewer and fewer hands at the top–you know, we’ve already tested that. That’s my point, that that model is delivering us worse economic growth, that model is giving us a shrinking middle class, and that model is what produced the greatest economic meltdown since the Great Depression. There’s nothing theoretical about that. We have seen what this business model, this economic model, produces–and it’s terrible. It’s terrible for workers and it’s also terrible for most businesses.
The biggest thing businesses have complained about in recent years is that they’re just not seeing enough consumer demand; they’re not seeing enough consumer buying power; they need more. You need people to buy what they are making in order to sustain the business and to grow the business, and there’s obviously a direct connection–I say obviously, but folks like Donald Trump ideologically don’t want to see it as obvious–you need people to have enough wages to be able to buy what they need. And if you are going to have a growing middle class, you need people to be able to buy more than just the bare necessities, right? And that’s what we’ve lost sight of.
JJ: And yet you can open any paper and find somebody saying: Well, yes, you know, ideally workers might make more, but the tough reality is if companies raise wages that will lead to joblessness, that jobs will be destroyed. And they present studies and numbers and charts that seem to make that argument. Is it really something where the economics are debated or highly contentious of how this would work?
HS: At our website BusinessForAFairMinimumWage.org, there’s actually a research summary, the most rigorous research on whether raising minimum wage causes job loss, and it does not. In other words, if you look at all the actual minimum wage increases in recent decades–so, not projecting forward and saying, “based on my particular, often ideological-driven economic assumptions going forward,” but if we’re looking back and looking at actual minimum wage increases. And not being simplistic and saying, “I’ll just pretend there wasn’t an economic meltdown in 2008 when I’m looking at the consequences of minimum wage,” but factoring things out. Anyway, the point is that this rigorous research on actual minimum wage increases really does show that there is either no effect or a slightly positive effect or in some cases a slightly negative effect, but when you look at it overall, on balance it does not cause job loss.
Just in the last year or two, the states that have raised the minimum wage are actually showing stronger job growth–now, I’m saying that, that is not one of those rigorous studies–but there is a reason for this, there is this direct connection: You can’t expect people to buy what’s being produced by business, to continue to buy that at that level or more, if you’re driving down wages; it doesn’t work. And one of the ways this was masked for a while was people were using their home equity, for example, going deeper into debt to try and get by when wages were going down, to maintain living standards. That lasted for a while, but as we know, that doesn’t last forever, and we saw the consequences in the economic meltdown.
JJ: Finally, making the argument that a higher minimum wage is good for business doesn’t preclude the social justice argument that people simply deserve to be able to survive on their paycheck, does it?
HS: No, if you work a full-time job, you shouldn’t be earning a poverty wage. I mean, it’s as simple as that. You shouldn’t be earning a poverty wage in general, but of course, if you work full time, at the end of the month it should add up to what you need to pay rent and other basics that you have.
And the other thing, if I could just add, because this is important as to why so many of our businesspeople feel so very strongly about this, is businesses that are using this better business model, one that invests in their workers, they really see things like stronger productivity, stronger customer service, they see dramatic reduction often in worker turnover. So there are all these factors that are also internal to the business, that bring real improvements in just the way the business is operating that are really important to the bottom line as well.
JJ: We’ve been speaking with Holly Sklar of Business for a Fair Minimum Wage. They’re online at BusinessForAFairMinimumWage.org . Holly Sklar, thank you so much for joining us this week on CounterSpin.
HS: Thank you.
This piece was reprinted by RINF Alternative News with permission from FAIR.