Raising the minimum wage, far from being a comprehensive solution, is at best a temporary fix to a much more fundamental problem.
There are some national issues that never seem to go away.
A couple times every decade we circle back to the issue of raising the minimum wage. The problem (underpaid workers) appears to be as concrete as the solution (raising the minimum wage). But something about this solution can’t be right. Solutions are supposed to kill problems, not anesthetize them into dormancy only to have them resurrect themselves a few years later.
“The roots of the problem extend to two groups: employers and citizens.”
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Something about raising the minimum wage isn’t working. We keep mowing over the same weed, fully expecting that this time it won’t grow back. When it does, we pull out the quickest fix at our disposal (a fix which also happens to require next to no effort from us) and mow over the weed a couple times until it looks just like another blade of grass. Each time it grows back, we resort to the usual lawnmower-that-is-Washington to get rid of the blight on our lawn.
How many times will we take the same mower to the same weed before we realize the mower is no solution at all?
Raising the minimum wage, far from being a comprehensive solution, is at best a temporary fix to a much more fundamental problem.
What lies beneath the surface? The roots of the problem extend to two groups: employers and citizens. With employers, the problem has to do with a misguided understanding of their purpose in society. With citizens, the problem has to do with our failure to live up to the responsibilities of citizenship.
For once, Washington is not the problem.
The Purpose of Business
In response to an inquiry by Bloomberg Businessweek over low employee wages, a spokesperson for McDonald’s declared that “as with most small businesses, wages are based on local wage laws and are competitive to similar jobs in the market.”
According to this statement, the law, and not the company itself, determines what qualifies as adequate compensation. In other words, McDonald’s apparently holds the view that as long as it operates within the limits of the law, its practices are above reproach. It’s the same mentality that prompts someone to say, “What does it matter if I look at porn? Its not like I’m breaking any laws.” Maybe not, but is it edifying to your character, and will it help you be a better member of society?
McDonald’s response is revealing because it evinces an incorrect and very destructive view of the purpose of business. It suggests that it is not a business’ responsibility to determine what are just wages for its employees. To McDonald’s, a business’ purpose is something other than adequately providing for its employees.
Companies, however, are supposed to be stewards of both their shareholders interests and their employees’ interests, equally. The very first responsibility of any company is to serve these two groups well. If it can’t serve the interests of those within the company, how will it ever be able to beneficially serve those outside the company (i.e. its customers and the civic community)?
When it comes to the minimum wage, the law is a baseline. There is no requirement that companies must pay new hires minimum wage. The law only specifies a minimum below which an employer may not go. If a company is doing justice to its first responsibility, it will ask itself, “What is a just wage for my employees?” Assuming the standard 40-hour workweek, a company needs to set their minimum wage at a level that still allows their employees to live decently. Anything below that baseline would be unjust.
But it doesn’t stop there. A company isn’t only charged with stewarding its employees’ interests, it is also charged with stewarding the resources of the society in which it is a part. Merely paying employees a wage above the minimum wage doesn’t absolve a company of its larger responsibility to society. A company needs to appraise the toll it is exacting on society by its very existence (socially, environmentally, economically).
Take, for example, Ohio. Wal-Mart leads the state in number of employees (or household members) on food stamps with 14,684. Meanwhile, between 2008 and 2013, Ohio’s cost of food stamps more than doubled to $3 billion. Wal-Mart, in the way it chooses to compensate its employees, is exacting a serious toll upon society. Taxpayers are effectively compensating employees on Wal-Mart’s behalf because the company has decided to underpay its workers.
The employer problem, or the reason why there is so much outcry over the minimum wage in the first place, fundamentally has to do with employers’ misunderstanding their basic responsibilities for existence. All businesses are charged with the responsibility of stewardship: first, they must steward the interests of those within in company, namely employees and shareholders, and secondly, the interests of those outside the company, namely customers and the larger community. Profits and growth are pursued as a means of better serving these two groups.
In light of this, can McDonald’s or Wal-Mart or any other employer in America that pays its employees minimum wage honestly claim that it is being true to its purpose of caring for its employees and the larger civic community?
The Responsibility of Citizens
Our country has an uncontrollable problem in looking to Washington to solve its problems. We have became entranced with the notion that the federal government is the best tool at our disposal for effecting large-scale change in society. But do we really believe this?
Do we really believe that Washington is the best way to solve society’s biggest problems, such as underpaid workers? Or are we pushing responsibility on Washington simply because it absolves us from having to bear the burden for change ourselves?
“How much do we really care about the unjust treatment of many of America’s hourly workers?”
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The “new normal’ in America is resorting to Washington to legislate our problems away. Sadly, this behavior has been so habituated in us over the last couple of decades that we no longer expend much effort to think through creative solutions ourselves. In a republic that thrives on voluntarily participation to manage society’s affairs, this mentality is disastrous.
Washington is an extension of ourselves (we elect people to represent our interests), but it is often not equipped to effect large-scale change (especially with the gridlock we see nowadays). The burden must be borne by citizens; we ought to resort to Washington only as a last resort. Underpaid workers is not Washington’s problem, it is our problem.
In light of this, we need to be honest with ourselves. How much do we really care about the unjust treatment of many of America’s hourly workers? If the issue truly concerns us, we would be eager to do whatever we can to restore just treatment to workers.
So what should change look like, and how do we bring it about?
Solving the Problem
The change that we want to see is more than just higher wages. It is for companies to allay the burden they place on society as a result of their existence (in this case, the number of their employees who are on some form of public assistance, such as food stamps).
The government has determined that full-time workers earning less than $16 per hour qualify for food stamps and Medicaid assistance (depending on household size). Thus, justice to both employees and the civic community would dictate that companies should pay each and every one of its workers at least $16 per hour. Companies should strive to make it impossible for any one of their workers to be eligible for public assistance. After all, can an employer really claim that it cares about its employees’ welfare when its employees are on welfare?
Admittedly, getting Wal-Mart or McDonald’s to pay every one of its workers no less than $16 per hour is unlikely, but companies can start by accelerating the rate at which employees’ hourly wage increases, as a means of getting as many of their employees to $16 per hour as quickly as possible.
Will this hurt profits? Of course. Will shareholders lose value? Absolutely. But a company is charged equally with providing for its employees and creating shareholder value. The two groups must be held in tension; one should never take precedence over the other.
Nevertheless, while quantitative value might be lost in the short term, I think the qualitative value gained in terms of employee loyalty and quality of service will ultimately generate more revenues in terms of increased sales and enhanced customer loyalty (contrast the Trader Joe’s or CostCo experience vis-a-vis Wal-Mart). As the company’s practices become more widely known, and as customer experience improves, the goodwill generated with customers will more than compensate for momentarily low profit margins.
It should be noted that the most effective solution is one that comes voluntarily on the part of employers. Mandating higher wages via Washington imposes equality on companies and restricts freedom in the process. This should be avoided as far as it’s possible.
So how to we get employers to change?
As consumers and potential customers, we are the real power-brokers. No one else is as formidable as we are in getting companies to change their practices. The great thing about capitalism is that companies are forced to listen to the market, otherwise they will go out of business.
The way that we can most efficiently change the way hourly employees are compensated is 1) by making our desires known, and 2) by responding with our wallets. Using our voices to lobby for higher wages and choosing to spend our money elsewhere, if adopted on a large enough scale, will cause any employer to change their practices.
The solution really is that simple, but effective implementation will require entrepreneurs to create innovative ways (something America excels at) to bring people together in pursuit of a common goal. Change.org, DoSomething.org and MoveOn.org are a start, but mere petition-signing isn’t enough on its own to generate a mass movement.
If this sounds daunting, if this sounds like too much work, then we have to wake up to the responsibilities of citizenship. In a republic, “the American practices the art of government in a small sphere within his reach,” as Alexis de Tocqueville noted back in 1835. When it comes to the minimum wage, the weight of the issue is simply too great for Washington to bear. We must bear the burden ourselves.
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–Originally published on philanthro.pe
–Photo: PropagandaTimes/Flickr
What are minimum-wage laws? Minimum-wages laws empower the government to use physical force to prevent people from working at a rate agreed upon by the parties involved–management and labor. How exactly does making work illegal help those workers who are now displaced, or cannot find employment at the government-set wage rates? The simple and obvious answer is that government does not help the poor. It forces them on the dole–that is, to live their lives at the expense of the taxpayers. Minimum wage laws are both immoral and economically irrational. Forcing people to work on terms set by the government… Read more »
I apologize for not having proofed this post better. “Principal” should be “principle”, the last dangling clause should have been deleted, and in the fourth to the last paragraph “take steps needs to provide” should be “take steps needed to provide.” I would not have the points dismissed for these superficial proofing errors.
Tom, I agree with everything you said…. Only thing I want to add to “For example, it is not the purpose of government to force people to buy certain sorts of energy, to buy certain types of toilets, to build certain types of houses….” let’s not forget the new light bulbs.
Light bulbs should be added to an ever-growing list of regulations. To quote Ayn Rand: “We are fast approaching . . . the stage where the government is free to do anything it pleases, while the citizens may act only with permission.”
I think there is an important issue missing from this conversation. Offshoring of jobs overseas. Companies get huge tax breaks for doing something they would anyway: opening factories overseas. If it was only the wage/currency disparity that was the issue, then maybe some companies would show loyalty and embrace the “made in america” label as a source of pride. However, knowing that their competitor essentially gets to keep all profits from overseas factories tax-free this is handing over too big an edge to competition. This tax break needs to be eradicated, and even turned into a tax penalty (and instituting… Read more »
Everyone seems to keep missing a big point. You can’t slowly raise the minimum wage. You flat out cannot. If you slowly raise the minimum wage, the federal reserve will just artificially raise inflation at a higher rate, devaluing your dollar more and making the wage increases a moot point.
Sorry, no. Your argument looks a lot like it boils down to “Let the market decide!”, the battle cry of the privileged, wealthy Republican. Nevertheless, I’ll be glad to consider your argument’s merits once the minimum wage is raised (yep!) to bring it back into line with the cost of living. We’ll have to go back to 1974 or so—that’s a good year to look at, because that was the year when average American income stopped keeping pace with inflation. In constant dollars, the US Federal minimum wage declined between 23% and 24% between 1974 and 2013. During that timeframe,… Read more »
Ignoring the devastating effects of such laws on young blacks seems like the white privileged thing to do. With around 40% of young blacks unable to find work, how is pricing them out of the job market even further supposed to help them?
The problem with raising the minimum wage to $16, or even $10, is that it will simply hasten the demise of those jobs. Increased costs = decreased demand. Maybe not in a big, noticeable way, but its inevitable. If the government raises the minimum wage to $10, expect to see more rapid computerized ordering systems coming to a eatery near you. These systems are already out there. Raising the costs of labor that is easily replaceable will simply hasten the replacement of that labor. I do agree that we should, as a nation and a people, be more aware and… Read more »
Understood. Let’s consider two things though. One, employees and skill sets. If you raise minimum wage for repetitive jobs that 18-81 year olds can do easily, you have to raise highly skilled jobs to. This in turn would cause a squeeze from businesses from both sides because customers want bigger discounts… Hence Wal Mart and McDonalds success. We must remember that these jobs are not careers and should used as stepping stones to get an education and start a career or business. I worked manual labor for years but eventually got an education, got a career and now a business.… Read more »
I agree! Let’s emphasize the importance of doing well in school and not getting into situations where minimum wage jobs are the only option.
@Chaz “We must remember that these jobs are not careers.” I suggest you read “No Shame in My Game: The Working Poor in the Inner City” for an interesting discussion on why our society assigns moral aptitude to white collar jobs and moral unworthiness to the much-maligned McJob. Although it’s assumed that workers flipping burgers don’t need skills or determination to make it through their shifts, Newman found that her college students who went to work shifts in these restaurants struggled alongside workers who excelled in multitasking, innovating, presenting excellent customer service to abusive customers, and navigating a tense multiracial… Read more »
Great article. I agree that we need to take the responsibility upon ourselves. But. it has to be said: there is nothing wrong with watching porn. And looking at it doesn’t make you a bad person.
Convincing businesses that employees are equal in importance to shareholders seems to be the key to this challenge. A few years ago working in a factory for just above minimum wage I made it a point to engage the shareholders who passed my station in conversation. I was quietly reprimanded. Do they not realize we are human beings? Don’t they want to know who is creating the products in which they have invested? The message from management was clear. No they don’t. Until this changes nothing will happen. If we ALL work together, great things are possible.
” It’s the same mentality that prompts someone to say, “What does it matter if I look at porn? Its not like I’m breaking any laws.” Maybe not, but is it edifying to your character, and will it help you be a better member of society?” Um, yes? Orgasms lower stress, less stress = happier population. Look at good porn and you can become better in society, look at bad porn and you can be a detriment to people you date but still it doesn’t change who you are to society overall. The majority of people look at porn at… Read more »
Short term: Just like with the minimum wage argument, you are giving your money to a group that exploits it’s workers, who are physically and emotionally harmed by the porn industry. Long term: you are training your brain through positive reinforcement to desire Photoshopped fakes instead of the real thing. This can inhibit your ability to connect with a real person (who doesn’t have a paint crew, lighting crew, and Photoshop crew on hand) and encourages “flipping” through partners – since your brain is now being wired to desire a “new thing” every few seconds. Some people have even reported… Read more »