Books

A $15 Minimum Wage Is What We Need - and Here's Why the Attacks on It Are Bogus

Let’s keep our eye on the prize: employees taking home money that allows them to survive.

The following is an excerpt from the new book The Fight for Fifteen by David Rolf (The New Press, 2016): 

Throughout a century of public debate, business lobbyists, trade associations, and the economic right have portrayed minimum wages as harmful to business. The criticisms raised by minimum-wage opponents display a remarkable consistency over the past hundred years, despite huge changes in our economy. Data and experience, in other words, have been irrelevant to those who oppose higher minimum wages. This is not because minimum wages actually cause widespread harm to business—the evidence is quite the opposite. It has nothing to do with the greater good of the American economy or the average American worker. It is because some conservative politicians, low-wage industry lobbyists, and large business associations (such as the National Restaurant Association and the U.S. Chamber of Commerce) habitually reject any “interference” in their pursuit of corporate profits. But it’s not just the big-business–right-wing nexus that has created a political environment in which wage hikes are seen as potentially toxic moves. Over the past four decades, liberals also have largely accepted the trickle-down explanation of what growth is (higher profits, rather than more jobs and higher wages) and where growth comes from (lower taxes and less regulation on businesses and the wealthy). Since the late 1970s, even most liberal Democratic proposals have done little more than tinker around the edges of century-old minimum-wage laws, increasing the wage by a quarter here and fifty cents there, allowing its value to erode precipitously over the past decades, afraid to claim the moral and economic center.

And so through Republican and Democratic administrations alike, corporate America has fought for and won less regulation, lower taxes, and higher profits, while middle-class America has gotten the shaft— policies that helped lead to the economic disaster of the Great Recession and the slow recovery that followed. For a generation, America’s political class has lacked the vision or courage to articulate or defend the true interests of American workers and the middle class.

The National Employment Law Project (NELP) examined a hundred years of criticism of the minimum wage and found three distinct themes that persistently reappear: (1) raising the minimum wage would impair the economy; (2) a higher minimum wage would ultimately harm the very workers it is intended to help (otherwise known as “concern trolling”); (3) the minimum wage violates America’s commitment to freedom and liberty.

When a federal minimum wage was first proposed in 1937, Gary Harrington of the National Publishers Association said, “Rome, 2,000 years ago, fell because the government began fixing the prices of services and commodities. We, however, know what has always happened when governments have tried to superintend the industry of private persons. The final result has always been distress, misery and despair.” In the years since Harrington made his dire prediction, the minimum wage would rise over two dozen times and nearly identical predictions of job loss and economic contraction—without regard or reference to the effects of earlier raises—would be voiced each and every time. This is despite “nothing short of a sea change in [economists’] understanding of the effects of minimum wage increases”: that raising minimum wages does far more good than harm. NELP calls these criticisms “little more than articles of faith repeated by the adherents of a stubborn ideology and expressed without reflection on the prevailing economic or political conditions.”

The real-world, experiential data are ever clearer—raising wages lifts workers out of poverty, creates new customers, boosts the economy, leads to imperceptibly small price impacts, and does not reduce job growth. And yet the same old scare stories that have been repeated for the past century are trotted out every time a minimum-wage increase is proposed—even though the sky has yet to fall.

Corporate America has fought for and won less regulation, lower taxes, and higher profits, while middle-class America has gotten the shaft— policies that helped lead to the economic disaster of the Great Recession and the slow recovery that followed. For a generation, America’s political class has lacked the vision or courage to articulate or defend the true interests of American workers and the middle class.

One of the most data-resistant anti-minimum-wage messages is that higher wages will force businesses to close their doors. When Congress was considering a federal minimum-wage increase in 1991, a Hardees VP said, “I don’t know what kind of dream world they’re in. When [the cost of] your labor component goes up, it ultimately gets passed on to the consumer. [If another wage increase were enacted], we’d probably be out of business at some point.” Hardees, is, of course, still churning out fast food to this date.

In 2003, San Francisco voters adopted a citywide minimum-wage law. The Golden Gate Restaurant Association called it a job killer that would “bankrupt many restaurants.” But as we’ve seen before, the city saw no statistically significant negative effects on the number of firms or employment as a result of the San Francisco law. In fact, firm growth was actually higher in the city than in neighboring cities, unemployment was below the statewide average, and job growth in bars and restaurants led the region. Though we don’t see net negative effects on business closure, there’s no doubt that wage hikes do require businesses to make changes to absorb the new costs.

Paying higher wages can require thought and change on the part of small businesses. But we know that after even major wage hikes in San Francisco, the number of businesses didn’t shrink—it grew. And let’s keep our eye on the other prize: employees are taking home more money to allow them to (still, barely) survive in one of the nation’s most expensive cities.

After the $15 minimum wage passed in Seattle last year, local lifestyle glossy Seattle Magazine ran an article with the inflammatory headline “Why Are So Many Seattle Restaurants Closing Lately?” It claimed that a number of recent restaurant closures were in part due to the wage increase.

Conservative pundits jumped all over the article. The right-wing think tank the Washington Policy Center went straight for the most hyperbolic anti-raise argument: $15 was shutting down businesses and depriving unfortunate low-wage workers of their jobs. “The shutdowns have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help,” it claimed. “Instead of delivering the promised ‘living wage’ of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero.”

Forbes covered the story, with an article titled “We Are Seeing the Effects of Seattle’s $15 an Hour Minimum Wage.” But when the Seattle Times went and actually talked with these businesses, they found that none of them listed the $15 minimum wage as a reason for ceasing operations. Renee Erickson was indeed closing her Boat Street Cafe, but she runs three others and is in the process of opening two more. Asked in an e-mail about the closure being associated with $15, she replied, “That’s weird, no, that’s not why I’m closing Boat Street. . . . I’m totally on board with the $15 min. It’s the right thing to do. . . . Opening more businesses would not be smart if I felt it was going to hinder my success.” 

 

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