By Lambert Strether of Corrente.
Let’s begin by noting that the current minimum wage is miserably inadequate and a flat insult to working people. The MIT Living Wage Calculator project has this to say:
While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2013 [or today]. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, cloth, house, and provide medical care for themselves and their families.
An analysis of the living wage using updated data from 2013 and compiling geographically specific expenditure data for food, childcare, health care, housing, transportation, and other basic necessities, finds that:
The minimum wage does not provide a living wage for most American families. A typical family of four (two working adults, two children) needs to work more than 3 full-time minimum-wage jobs (a 68-hour work week per working adult) to earn a living wage. Across all family sizes, the living wage exceeds the poverty threshold, often used to identify need. This means that families earning between the poverty threshold ($23,283 for two working adults, two children) and the median living wage ($51,224 for two working adults, two children per year before taxes), may fall short of the income and assistance they require to meet their basic needs.
Three jobs, 68 hours… It’s hard work — and extremely time-consuming! — to be part of the working poor.
Is raising the minimum wage popular?
Yes, it is. Rasmussen (a Republican-leaning polling firm) finds that 54% of American Adults favor an increase in the minimum wage, and 32% are opposed. That may be why increasing the minimum wage did so well in the 2014 election:
Voters in four red states approved ballot initiatives to raise their state minimum wages on Tuesday, sending another message to Washington that Americans support a higher wage floor.
In fact, the margins were, in some cases, greater than those of the Rasmussen poll (22%); Alaska’s initiative won by 38%, Arkansas’ by 31%, and Nebraska’s by 20%.
So 2014 was a debacle for Democratic candidates, but not for the sort of policy that, given their brand identity, one would expect Democrats to be backing. Perhaps the Democrats should give consideration to not s*cking on policy if they want to win?
But by what amount should the minimum wage be raised?
There are several ways of looking at this question, depending on the sort of social contract you consider wage labor to be.
$21.72. If by productivity, $21.72. Here the social contract is that if workers become more efficient, then their wages should increase in proportion to the efficiency gains. Oldthink, I know! But if that’s your theory, $21.72 is the result. CEPR:
Between the end of World War II and 1968, the minimum wage tracked average productivity growth fairly closely. S ince 1968, however, productivity growth has far outpaced the minimum wage. If the minimum wage had continued to move with average productivity after 1968, it would have reached $21.72 per hour in 2012–a rate well above the average production worker wage. If minimum-wage workers received only half of the productivity gains over the period, the federal minimum would be $15.34. Even if the minimum wage only grew at one-fourth the rate of productivity, in 2012 it would be set at $12.25.
$15.00. If by cost of reproducing labor power, $15.00.
Here the social contract is that workers sell their labor power for what it costs to reproduce it (which is what “a living wage” is shorthand for). As it turns out, that’s $15.00 an hour. Americans for Tax Fairness:
[We have] analyzed the effect of Walmart’s new wage policy and found that even after the planned pay hikes are fully implemented, large taxpayer subsidies will still be required to make up for the company’s low wages.
Here’s how the numbers break down. An employee working 34 hours a week (Walmart’s definition of “full-time”) for $9 an hour would take home about $16,000 a year. If that worker was single, she would qualify for three out of five public programs. With children, the employee would qualify for all eight of the public programs—and the same is true at the $10 an hour rate.
The reality is Walmart would need to raise its base pay to at least $15 an hour to properly compensate its workers and relieve America’s taxpayers from picking up part of its payroll tab [which amount to $6.2 billion a year in public subsidies that support its employees: food stamps, Medicaid, child care support and five other taxpayer-funded programs].
It’s a remarkable exhibition of state capture that Walmart has actually gotten the taxpayers to “top up” the wage packet they offer.
$10.10. If you’re a Democrat, $10.10.
Finally, one might take the view that the social contract is a pure power relation: Workers are paid what they have the power to take, period; “the strong do what they can and the weak suffer what they must,” as Thucydides said. Here — after agitation began for $15 — Democrats determined that the appropriate level of suffering for workers is to be denied a share in productivity gains, and to continue combining their wage packet with government subsidies to make a living wage.
Obama is throwing his support behind congressional Democrats’ proposal to raise the minimum wage to $10.10 and peg it to inflation, more than a dollar higher than the $9 proposal he made in his State of the Union address in February.
“The President has long supported raising the minimum wage so hardworking Americans can have a decent wage for a day’s works to support their families and make ends meet, and he supports the Harkin/Miller bill that accomplishes this important goal,” the White House official said in an email.
Given that $10.10 does not, as we have just seen, make ends meet, the White House email statement is grotesquely, breathtakingly cynical, even for Obama. (And whenever you hear “hardworking Americans,” keep a sharp eye out of for the con.) In any case, the real tell here is the number itself: Why 10.10? I’ve never been able to find a justification for it. Euphony? Why not be generous, and round up to the nearest quarter, for 10.25? Regardless, $10.10 is the number, and in one of his famous Executive Orders, Obama put that in place for some workers:
On February 12, 2014, President Obama signed Executive Order 13658, “Establishing a Minimum Wage for Contractors,” to raise the minimum wage to $10.10 for all workers on Federal construction and service contracts. The President took this executive action because raising wages will improve the quality and efficiency of services provided to the government. Boosting wages lowers turnover, increases morale, and will lead to higher productivity overall on Federal contracts.
However, as we have seen, $10.10 is not a living wage. And you will notice that none of the justifications in the Order have anything to do with workers at all.
What happens to leftists who try to raise the minimum wage “too much”?
The Democrats try to punish them, or discredit them and compromise away their proposals Naturellement. Two examples, first Seattle, Washington:
Mayor Ed Murray is expected to release his plan to raise Seattle’s minimum wage as soon as today. No matter what happens in the $15 wage debate, Seattle City Councilmember Kshama Sawant has already won.
If the Seattle City Council passes a $15 wage in the coming months (as appears likely), Sawant will appropriately get credit for coming out of nowhere to commandeer the city’s political agenda.
$15.00! Sawant got the workers “too much!” So what do the Democrats do? Run a candidate against Sawant, of course! Black Agenda Report:
Kshama Sawant helped lead a multi-year effort to raise the minimum wage in Seattle. The CEO of Seattle’s Urban League, [Panm Banks,] a longtime political insider with great fundraising connections wants to run for local office. Apparently there are no neoliberal pension-cutting Democrats for her to go after in Seattle, and no neolithic Republicans worth dethroning either.
The number one and only target of Banks’ campaign for office will be the socialist, because she knows things. Pam Banks knows that while you can never have too many Republicans or Democrats in office, even one socialist is way too many. CEO Banks knows that while you can never have too many corporate funded politicians, even one elected official that doesn’t take the corporate cash makes everybody else feel nervous and look bad. … Banks knows that any run against a socialist incumbent will be well funded by forces who already call the League, and her, their good friend. They just might not be friends of the people of Seattle.
Under Portland mayor [Brennan’s] proposal, the minimum wage would initially increase from the current $7.50 to $9.50 an hour, with additional increases scheduled over the next few years.
Again, $15.00! Those darn Greens are trying to get the workers “too much!” Green state chair Asher Platts met with Brennan (sorry, Faceborg):
I saw the mayor of Portland today, he seemed really upset at the #15now campaign for overshadowing his more moderate min wage proposal.
What was odd, was when I explained to him that we supported any work to raise the wage, and that our campaign does him a favor by making his proposal look more moderate, and explained how with negotiations you always ask for more than you expect and compromise your way back, he said, “maybe that’s how you negotiate Asher, but that’s not how I negotiate.”
Which I was confused about, because… the definition of negotiation….
I guess he’s right though, that’s not how Democrats like him negotiate– they start conceding everything to their opponent and work their way backwards from there.
“[T]hat’s not how I negotiate.” Indeed!
Are there business benefits to raising the minimum wage?
Besides those mentioned in the statement that accompanies Obama’s Executive Order? Why, yes. One of the leitmotifs of the Obama recession has been business owners and managers complaining that “Darn it, we just can’t fill that skilled welder position for $8.00 an hour! What’s wrong with people these days?” Well, even or perhaps especially if you accept human rental by capital as the means of doing the work that society needs done, there is a mechanism for handling that issue: The pricing mechanism. The Gap — before Walmart and McDonalds — applied it, with wondrous results:
So far, there’s been one clear reaction, a Gap executive said at a conference Tuesday in Washington. For years, the company had tried to get more people to apply to work at Gap’s stores. Only the wage increase made any difference.
“Almost immediately, we saw our applications increase by double digits,” said Dan Henkle, the company’s global head of human resources, on a panel at the Council of Institutional Investors’ spring conference. That, in itself, should lead to better performance, he thinks. “The idea is, the more people who are applying to your stores, the greater the pool to choose from, you’ll get the best talent into your stores.”
If the Democrats — and, for that matter, J-Yel — are truly worried about the labor force participation rate, instead of shedding crocodile tears about it, then one way to entice people back into the crapified jobs is to at the very least not offer crapified wages. Eh?
Is there a business downside to raising the minimum wage?
Once you get away from the chalkboard, the neoliberal textbooks, and talk radio, it seems not. The fight in Seattle revolved around the restaurant owners, and it seems that they suffered no ill effects. Seattle Times:
Truth Needle: Is $15 wage dooming Seattle restaurants? Owners say no
The claim: Recent Seattle restaurant closures may have been linked to the city’s new $15 minimum wage.
What we found: False.
An article suggesting the $15-an-hour minimum wage was a factor in some recent Seattle restaurant closures caught fire with national and conservative media this week. The only problem: When we asked the restaurateurs in question, they said it’s flat wrong.
And here’s the cost to diners from Eater:
How will the wage law impact the consumer? Will it increase prices? According to a University of Washington report prepared for the Seattle Income Inequality Advisory Committee, wage increases of about 10 percent can result in a 1- to 2-percent increase in a restaurant’s operating costs, which in turn translates to “one-time” price increases of about 0.7 percent. And so because the full wage increase from $9.47 to $15.00 represents a 58 percent change, consumers could see price hikes of about 4 percent total in the coming years from the wage law…
So, I can increase the wage packet for the cooks, the waitstaff, and everybody else by 60% while paying — let me break out my calculator: 20 * 1.04 = 20.8 — 80¢ on a twenty dollar meal? That doesn’t really seem so bad, does it?
So why do Democrats keep kicking the left?
I don’t know, honestly I don’t, although I’m reminded of Harry Reid disliking the “smelly tourists” who visit the Capitol; fortunately, the new Visitors Center forces them far underground, away from the sensitive nostrils of our elites. And I’m also reminded of Frum’s Law:
— David Frum (@davidfrum) August 10, 2010
But why Democrats hate the base — I grant I’m identifying the left with the base — I don’t know.
Could it be that Democrats just don’t want working people to succeed?
I think it could. McDonalds offered its (non-franchise) workers a raise:
[B]ut hopes had deflated. Ms. Andino, who earns $8.75 an hour, the minimum wage in New York State, quickly learned McDonald’s was offering only $1 an hour more than that. And the pay increase was only for employees of company-owned stores, not for employees like Ms. Andino who worked at McDonald’s franchises.
But that did not stop Ms. Andino from feeling encouraged by the news. By 11 a.m. that day, she was demonstrating in Midtown Manhattan with dozens of other fast-food workers for better pay. The employees derided McDonald’s offer as too little money for too few employees, but they hailed the overture as proof that their protests were finally bearing fruit.
“We’re making progress,” said Ms. Andino, 20, who like many other workers continued to press McDonald’s and some retailers to increase wages to $15 an hour. “If we continue fighting, we’re going to end up winning.”
“If we continue fighting, we’re going to end up winning.” I think that’s a feeling that Democrats just don’t want working people to have. The weak suffer as they must.
 Interestingly, Ikea pegged its wage to the results of that calculator.
 In other words, labor power is a commodity like any other, and in this case is sold at cost.
 Here are Bob and Ray on the Thucydidean theory of labor relations. Caution: The humor is Sahara dry.
 Amusingly, our crazypants Republican governor picked up on this.
“We’re the girl you’ll take under the bleachers but you won’t be seen with in the light of day,” the blogger, Susan Madrak pointedly told Axelrod on the call, which was organzied for liberal bloggers and progressive media.
Needless to say, she was not invited back. Now, as of this moment, the Democrats are emitting left-like noises, but I think that’s because “they have no place to go”; in the 2014 debacle, most of Steve Israel’s Blue Dogs got nuked, as voters decided they might as well vote for a real Repblican instead of a fake one.
 I did some Googling and found what I believe to be the original expression of Frum’s Law. Curiously, it seems to be a retweet (“RT”) from Glenn Greenwald (“@ggreenwald”) but I can’t find anything from Greenwald at all. So Frum’s Law it is.
 A good proxy for the size of the left is 14% of the electorate: Those who think ObamaCare doesn’t go far enough, and presumably want single payer or even a national health service. Last I checked, that’s about the size of the (feared) Tea Party.
 Unless it’s channelled, controlled, and neutralized by the Democratic nomenklatura, of course.