House Votes to Raise Minimum Wage, Businesses Fight Back

Why the house was right in trying waging the minimum wage

I’d like you to read the following quote from Representative Donald M. Payne of New Jersey, speaking in 2018 on proposed changes to the federal SNAP program:

The United States Government should be making it easier for Americans to maintain a decent standard of living. Let us end this administration’s war on the working poor and help make better lives for all of our citizens.

Let us table any discussion of the context within which the statement was made. And if you support the SNAP reform he’s alluding to (the specifics of which I’m excluding purposely), forget about his political position for a moment. Does anything strike you as “off” about the above? Surely the sentiment is one that we all can support, regardless of partisan affiliation.

However, if you’re like me, this quote makes you cringe. Let there be no confusion, I am staunchly opposed to the SNAP reforms the Trump administration has proposed since 2017. Indeed, I worked as a research specialist for the Sierra Club on their Sierra Rise project which specifically tried to combat such changes. But the idea that we should work to preserve the “working poor” is patently offensive.

The very wording of the phrase “working poor” contradicts the ludicrous idea that economic success in America is dependent upon hard work alone. This meritocratic myth is so pervasive in our society that we often fail to recognize, as Rep. Payne has done, that workers’ income is not in any way tied to the value of the work they produce.

The infamously biased Cato Institute has produced plenty of “research” in order to prove that people like me are mistaken. For example, I’ve never minced words about my view that hedge fund managers are grossly overpaid. After all, their job is essentially to move money around, contributing almost nothing to society. And yet the average salary of a hedge fund manager is about $350,000 a year — the same as the income for many heart surgeons. Defenders of the “invisible hand” have quite a hill to climb in order to show that the work of hedge fund managers and heart surgeons is equally as valuable.

According to Cato officials, though, this is evidence of the free market functioning properly: “…the private hedge fund people only make money because others voluntarily decide that it’s worth it to invest their money with them. People only pay corporate lawyers what they think they’re worth.”

While this may be technically true, we must consider all the factors which lead to people deciding that hedge fund managers are “worth” so much. Steven A. Cohen, for example, earned $2.3 billion in 2013 alone, as former labor secretary Robert Reich writes in his book Saving Capitalism. If you agree with the Cato report, this is because his clients view him as “worth” that much investment. But why? Because he was likely to return a profit? What if his ability to do so was fueled by corruption?

To the surprise of nobody, Cohen’s economic output is a direct result of his deleterious ways. It was revealed in criminal proceedings against him that insider trading at SAC capital under Cohen was “substantial, pervasive and on a scale without known precedent in the hedge fund industry”, to quote the indictment to which he plead guilty.

Cohen was not the first, nor will he be the last, to earn billions of dollars by engaging in fraud. Indeed, Level Global Investors co-founder Anthony Chiasson once called insider information “the coin of the realm in securities markets.” Anyone who claims that worth and work are linked in light of this quote is sorely mistaken.

It is for this reason that when the House of Representatives passed a bill calling for a $15 minimum wage on Thursday, I was pleasantly surprised. Although Senate Majority leader McConnell is unlikely to even bring the bill before the Senate, the vote is at the very least an acknowledgment that minimum-wage workers are not being paid what they’re “worth.” After all, if tied to inflation, the minimum wage would be about $12 per hour today instead of the federally-mandated $7.50.

The backlash against the bill was swift and calculated. Businesses immediately touted the report from the CBO which found that implementing the raise would raise pay for 17 million workers, but would also cost 1.3 million jobs. Admittedly, 1.3 million jobs is a lot…but isn’t that worth it?

After all, employment is an admittedly arbitrary goal. Those who believe that the economy is healthy right now due to our low unemployment rate should stop to consider not just whether or not people have jobs, but whether those jobs are actually sustaining people. Despite low unemployment, 78% of American workers still live paycheck-to-paycheck. Yes, you read that right. Even further, 70% of Americans have debt, and more than half save less than $100 per month despite working full time.

So the Trump administration can scream about its cherry-picked numbers until they’re sore in the throats, but the reality is that low unemployment does not necessarily mean that workers are better off. The vast majority of Americans cannot save a substantial amount of money, making upward mobility nearly impossible. And this is all beside the fact that the Fed recently lowered interest rates, signaling that a recession (which would undoubtedly suppress the already-low wages) may be on its way.

Raising the minimum wage is a great idea. Economists generally agree that the benefits accrued from raising the pay of 17 million workers greatly offset the cost of losing about one million jobs. It’s time we started building an economy in which jobs are not just a title to be had, but an actual source of sustainment which facilitates upward mobility. It’s time to give the workers what they’re worth.