Tag Archives: minimum standard of living

America’s Future Building Block #4 – Eliminate Minimum Wage and Fully Employ America….

While governments may choose to ensure that all citizens receive a minimum amount of dollars to consume, in the age of globalization, governments should not attempt to force this social welfare through minimum wage controls. Wages should be set by the market and any shortfall between wages and government’s socialized minimum family consumption floor should be made up by other socialized means.

At first glance, this assertion seems to support eliminating the historical gains made by workers against business’s exploitation. It seems to suggest that governments would thwart worker’s collective bargaining rights if they were to eliminate minimum wages. Yet these notions must be swiftly resolved if industrialized nations are to protect the security of workers jobs from their continued drift off shore. For America, minimum wage controls must be eliminated if America is to bring jobs back from overseas.

I hypothesize that the minimum wage, through its intermingling of two key concepts, is a poor attempt to force businesses to solve an American social goal. First is the concept that all Americans should by virtue of being born in America of having joined us through naturalization be guaranteed a minimum standard of living. Second is the concept that companies should only hire an employee if they can guarantee them, through employment for 40 hours per week, the minimum standard of living that has been set by our government.

This idea of an American minimum standard of living has never truly been established but we flirt with the idea in various ways. One attempt was the establishment of the poverty level as a measurement of President Johnson’s war on poverty. The poverty level established a family income that represented the ability of families to meet food and other basic consumption needs.

Minimum wage and poverty levels are fairly arbitrary and do not take into account actual cost of living differences between places like New York City and Jackson, Mississippi nor do they compare the level of consumption of poverty stricken Americans with the rest of the world, most who live well beyond American standards.

However at around 15%, poverty levels in America are once again approaching percentages close to those when America started measuring them in 1965. Since the methodology has not changed much in 50 years, the relative figures are consistent and demonstrate that our war on poverty has not been won. Yet the figures have been used by America’s legislation as a basis for multiple government redistribution programs and have since been ingrained in our political system.

The minimum wage is just as arbitrary as the poverty level and is not tied to it in any way. Earning the minimum wage actually places a person below the poverty level, yet it does create a somewhat lower floor than the poverty level for those Americans who are fully employed. And in the absence of collective bargaining, the minimum wage is an effort to protect the value of a workers’ worth. Why then should eliminating it be considered?

Prior to the emergence of the international corporate industrial state, growing American monopolies increased profits by reducing costs of providing safe and comfortable working conditions for workers as well as by providing low wages. For decades, workers collectively bargained for both better working conditions and for better pay. In addition, the federal government supported the collective bargaining process through the establishment of the minimum wage and by redistribution of corporate profits through taxation. Yet the creation of these defenses against corporate abuse led to antagonistic employer/worker environments that fed an examination of international wage differentials and an outflow of jobs to countries with much lower wages and workplace restrictions.

Many recall the showdown portrayed in Michael Moore’s first documentary “Roger and Me” in which GM gave its workers an ultimatum in Flint, Michigan; accept substantial pay cuts or accept a closure of Flint’s plant and the destruction of the town. Instead of accepting the pay cut, grossly misunderstanding the changing dynamics of the globalizing world, GM’s workers chose to strike against lower wages and the plant closed, devastating Flint. Globalization establishes the world’s value of a job, no matter the indignation felt by Americans for having to work at that price level.

Choosing to not accept the global price because of some indignation felt about the low value placed on international labor only eliminates the worker from participating in the global work place. Placing a minimum wage above the global price for labor only forces labor to migrate to other world locations that do not set minimum wages above the global wage rate. Taxing corporations above the global taxation rate to support externalized costs of higher unemployment that result from minimum wage policies only speeds the movement of labor offshore.

In the age of globalization, any one country’s defenses against corporate wage abuses are impotent against the international corporate industrial state without the support of other countries. While countries could band together as an international collective bargaining unit to defend the rights of higher wages for workers, many countries are willing to accept much lower wage levels than the United States. Those countries that accept a much lower wage rate will therefore gain the jobs that America’s minimum wage sends to them.

Can’t America let other countries have the low paying jobs while our businesses create higher paying, more skilled ones for all in America, making minimum wage obsolete? Even if America was able to create enough jobs above minimum wage so that all qualifying Americans could get higher paying jobs, the simple truth is that intellectual and physical bell curves exist in any population, including America and many Americans would simply not qualify for those jobs. In addition, the poor state of our public schools creates a dropout rate that could not begin to support such a higher breadth of skill level required for all Americans to have such jobs. If that many high paying jobs could be created in America, they would simply be left unfilled. No, if all workers are to be able to contribute to our society, then some jobs must be filled at global wages well below the minimum wage that has been set in America.

Does that mean that those Americans who are unable to fill positions that pay above the minimum wage should have to live below a minimum sustenance level that is now being partially maintained by the minimum wage? …of course not…. However, as I previously pointed out, minimum wage levels are not the appropriate mechanism to meet those needs. Our government has multiple social welfare tools at its disposal that should not hinder business to accomplish supplementation of income.

Because some Americans should have to work at less than the current minimum wage and must be supported by other means to reach a social floor, should high wealth individuals be forced to fully support their shortfall?…Of course not… But, the idea that continues to be suggested by defenders of Reagan’s trickledown economics of lowering taxes on the rich as a solution to America’s wage and job ills should simply be refuted on the silliness of its merits. It has proven to be a fallacy of pre-globalization politics that by its very nature is illogical. This once revered solution has been antiquated by both globalization and America’s promotion of greed as accepted driver of business.

History has with few exceptions shown that given more money to invest, wealthy Americans will invest it in higher returns of other parts of the world instead of relatively lower returns found in America. However, higher tax rates on capital gains and income of the highest few percent of American earners with offsetting tax reduction opportunities to invest back into America should coax our high wealth individuals back into responsibility for America’s welfare and stem this downright harmful trend toward America’s future.

If corporations are relieved of their minimum wage burdens, should they also be relieved of any responsibilities to sustain America’s workers who do not qualify for higher wages? Of course not…. However, mechanisms that force corporate participation should not incentivize them to move labor offshore. Business participation should instead be mandated to support government social policies through tax reductions for investments in infrastructure that support additional labor and through tariffs for products supplied to America that hinder American labor without greater, offsetting benefits.

Can organized labor be allowed to create wastelands such as Flint, Michigan by placing a stranglehold on global wage levels for jobs that have long since been pressed downward below minimum wage? Of course not…This last bitter pill may be the most difficult to swallow. While labor must be allowed a full participation in the corporations’ development of global competitiveness and must be able to transparently understand labor’s value and role in the corporation’s international success, any support for labor to thwart full employment by forcing excessive labor rates should be rejected as well.

If America’s objective is for all Americans to be fully employed and contributing to our nation, and for our country to support all workers with a social net floor of consumer spending that allows all to live in dignity, then more logical solutions than minimum wage exist. If only America can work through them.

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Filed under American Governance, American Politics, Full Employment