Raising the Minimum Wage: Too Little, Too Late

President Obama and the Democratic Party have embarked on a campaign to raise the federal minimum wage. Should we care?

Raising the Minimum Wage: Too Little, Too Late
by Wayne Price and Eric Laursen

President Obama and the Democratic Party have embarked on a campaign to raise the federal minimum wage. Currently set at $7.25 an hour, they propose boosting it to $10.10—a level the president has already implemented for most federal employees and those of federal contractors. Roughly 21% of the workforce would be affected by an increase: about 5% currently earn the federally mandated minimum, and roughly another 16% earn between $7.26 and $10.09 per hour.

It’s nice that Obama, whose only signature on a minimum wage bill was more than five years ago, has decided to make it an issue again. A higher minimum wage is, of course, good or potentially good news for working people in a country that encourages employers to apply maximum downward pressure on pay. But why are the president and his party suddenly focusing on the minimum wage?

The answer is that the president seems to have scared himself a bit when he spoke out about income inequality shortly after his second administration began last year. Instead of backing up his rhetoric with proposals to raise taxes on the 1% and redirect the proceeds to programs that help working people, he quietly switched his focus in a direction his backers would find less troublesome.

The Washington Post’s Zachary Goldfarb reports:

“A senior White House official, who spoke on the condition of anonymity in order to discuss private conversations, said that Obama primarily wanted to focus on more inclusive language such as ‘opportunity’ and specific policies such as raising the minimum wage or infrastructure spending to create jobs that could help workers.”[1]

Or, as Obama told The New Yorker in a profile earlier this year, “The appetite for tax-and-transfer strategies, even among Democrats, much less among independents or Republicans, is probably somewhat limited.”[2]

Judging strictly by the numbers, however, Obama’s proposal is too little, too late. The minimum wage used to be an effective tool for improving living conditions, but it hasn’t been for many years now. First instituted in 1938, the federal minimum increased 170% in real value from 1948 to 1968—the so-called “golden age” for American workers. Since then, the real value of the minimum wage has mostly stagnated—and in the 1980s it actually plunged.[3]

The minimum wage doesn’t go up automatically—Congress has to legislate a raise. But from 1981 to 1990, and then again from 1997 to 2007, Congress just didn’t do it. If the minimum wage had simply kept pace with growth in labor productivity since the ’60s, it would have been $16.54 last year, according to a very conservative calculation by the Center for Economic and Policy Research—a level the Obama proposal doesn’t even approach. And even if the minimum wage is increased to $10.10, there are still 3.3 million “tipped workers” nationwide (including 2 million waiters, 72% of whom are women) whose $2.13 federal minimum wage has not increased since 1991, and who would not see an increase unless additional legislation provided for it.

None of this should come as a surprise. Democratic administrations have historically been almost as negative toward minimum wage growth as Republican ones, out of concern that their big donors would resent any upward pressure on wages. During the Clinton presidency, when Sen. Ted Kennedy proposed indexing the minimum wage to keep it from eroding any further, the White House rejected the idea.

Meanwhile, the Obama administration is continuing its efforts to push through the Trans-Pacific Partnership and the Transatlantic Free Trade Area agreement—sweeping trade deals, negotiated in secret, that are liable to push working people’s wages lower than any incremental improvement to the minimum wage could ever compensate for.

Such challenges, the product of a calcified and fundamentally conservative political process, don’t argue for focusing on one narrow issue, like the minimum wage, but for developing a bigger, broader vision: how to not only increase the flow of wealth to working people, but how to give them more control over their economic destinies. We can’t achieve this by focusing on higher wages, nor even higher living standards, but on building power, which has been slipping away from working people for generations.

Power can come in many forms, including worker-controlled workplaces; community-based, cooperative production and distribution of goods and services; and effective unions that aren’t afraid to demand something more than a decent wage from business. Ultimately, it comes in the form of direct democracy that gives everyone a voice in how their community and their society operate.

Building this new economic and political reality takes time, thought, and a coming-together of communities—working-class whites, African and Hispanic Americans, disadvantaged women, immigrants, and others who have traditionally been taught to hate each other. It’s never been more urgent to get started.

But the effort can bear fruit in the short run as well. It’s worth remembering that the minimum wage and other gains of the New Deal, the Great Society, and the War on Poverty—limited though they may have been—were won not through incremental change but through massive demonstrations, factory sit-down strikes, civil disobedience, and powerful mass movements. These actions, outside the electoral arena, forced the political parties to pass laws they would not otherwise have enacted. Unless we learn the lessons of this history, we’ll only be stuck once more with too little, too late.

 

Wayne Price of New York City is a long-time anarchist militant, theorist, and writer.

Eric Laursen of Massachusetts is an anarchist organizer, writer, scholar, and member of the Agency advisory council.

 

[1] Zachary A. Goldfarb, “With Democrats split on inequality issues, Obama shifts talk away from income gap,” Washington Post, July 4, 2014. http://www.washingtonpost.com/politics/with-democrats-split-on-inequality-issues-obama-shifts-talk-away-from-income-gap/2014/07/04/102f1f32-02be-11e4-b8ff-89afd3fad6bd_story.html

[2] David Remnick, “Going the distance,” The New Yorker, January 27, 2014. http://www.newyorker.com/magazine/2014/01/27/going-the-distance-2

[3] Dean Baker and Will Kimball, “The Minimum Wage and Economic Growth,” Center for Economic and Policy Research, February 12, 2013. This is not the 1940s-60s anymore. Don’t have a dynamic that allows wages to rise. At the same time, we don’t have to be confined to something that worked in the industrial economy.
http://www.cepr.net/index.php/blogs/cepr-blog/the-minimum-wage-and-economic-growth

 

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