So, Why Do We Need a Minimum Wage? - The African World - By Bill Fletcher, Jr.

When I received a call from BlackCommentator.com publisher, Peter Gamble, the other day, I assumed that it was BC business. To my surprise he wanted to discuss a problem/challenge he had encountered. He found himself involved in a discussion with Tea Party supporters who were attacking the whole idea of a minimum wage, suggesting that the so-called free market should set the wage rate and that a formal minimum wage was harmful. As backward an ideas as this is, it is actually quite common, particularly among a set of small businesspeople and right-wing ideologues. Thus, it is worth addressing head on.

It is important to begin with a recognition that there is no such a thing as a “free market.” When capitalists get into trouble they go scurrying to the government in search of assistance (remember the collapse of 2008???). When the economy is hot, the business class screams to the heavens about the so-called “free market,” insisting that government needs to get out of the way and that anything that inhibits profits should be removed. Of course, when the economy is not going so well, the business class also screams, but this time a different tune, insisting that they must be saved because, after all, they are too big and/or important to fail. I am sure that you have heard that tune.

So, the assumption that the so-called “free market” can set the wage rate is nothing more or less than a mean-spirited myth. The market, and specifically, the demand for labor power is something that will certainly influence the wages that are available, but there are other factors that must be considered.

This leads us to the second point. The assumption that the so-called free market will establish an acceptable wage or salary rate begs an important question: acceptable for who? Consider for a moment an exercise that I have used many times in trainings (and which I reference in my book “They’re Bankrupting Us” – And Twenty Other Myths about Unions). Get a group of people together. Now, think about a job. Come up with what you believe to be a very good wage/salary and benefit package. Ask how many of these individuals - assuming that they were qualified - would be interested in the job. Get a showing of hands. Now reduce the wage/salary and/or benefit package slightly. Ask how many people would still be interested. Finally, keep reducing the wage/salary and/or benefit package and ask for a showing of hands each time that you reduce the amount. Notice what happens.

You will find something that occurs every day in the labor market. There is almost always someone who, for whatever reason, is prepared to take a job for less than others. This does not reflect a moral judgment but instead reflects the personal circumstances of different individuals. Without a floor, brought about either through a minimum wage statute or a collective bargaining agreement won by workers through a labor union, the business class is free to keep reducing the wage/salary and benefit package. It can do this until it reaches the point where no one will accept what is offered.

Let us consider one other aspect to this. What people are prepared to accept depends on a range of circumstances, not the least being the overall state of the economy. Thus, in times of increased unemployment or if one lives in a very depressed region, one might take a job that, all things being equal, one would never have considered. Think about the old “company towns” that were controlled by a large company and where everyone and everything in that town was dependent on the whims of that corporation. In periods of great economic insecurity, people might be prepared to put themself into virtual bondage. If there are no laws to protect them and/or no labor unions, someone can find their living standard suppressed.

There is a third factor that must be considered when speaking about a minimum wage. If people have no money they cannot buy the products that are made. This is something that Henry Ford, despite being an extreme right-winger, realized in the early part of the 20th century. Workers needed a wage such that they could ultimately buy the cars that he produced. If workers are all in poverty, there are many warehouses that will go full with unsold commodities.

In other words, if you want to keep the economy moving, workers need income. Minimum wage, or at least the theory behind it, is supposed to give workers enough to do a little bit more than get by. The problem is that conservative forces in US society have, for several decades, restricted the growth of the minimum wage. According to Senator Elizabeth Warren, if the federal minimum wage had kept up with the increases in productivity, it would stand today at roughly $22/hour rather than $7.25. So, instead of the statutory minimum wage, being a respectable component of a social safety net, it represents an insult to the working poor.

By looking at the actual history of capitalism, rather than the myths associated with it, one thing that is clear is that lacking government or union protections, the business class will squeeze all that they can from working people. The so-called free market will not equalize anything, nor will it guarantee that workers receive the sort of compensation necessary in order to live rather than simply exist.

The next time that one of these Tea Party fanatics, or for that matter even your cranky “Uncle Albert” at a family dinner, suggests that a minimum wage is not necessary, please don’t forget to ask them how far $7.25 or even $8.00/will take them these days. While the Tea Party and “Uncle Albert” have a right to their own opinions, they have no right - morally or otherwise - to create their own facts.