Society can afford a $25hr Minimum wage, capitalism can't

By Richard Mellor

Afscme Local 444, retired

Responding to pressure from lower paid workers in a period of massive wealth accumulation at the top, sections of the 1% and their political representatives are attempting to undercut the $15 an hour minimum wage campaign with a call for an increase in the federal minimum wage to $10.10; this is Obama’s figure he wants to attain in three steps by 2016. Adjusted for inflation, today’s minimum at $7.25 is worth less than the minimum wage under Reagan. One study shows that the U.S. has the third-lowest social mobility among wealth nations ahead only of Italy and Britain.

What we are talking about here is the price of labor power; the cost of purchasing a human being’s life activity and using it over a period of time.  Historically capitalists and their political representatives have opposed such a concept as a minimum wage and the first minimum wage in the US wasn’t introduced until 1938. This was a year or so after the great uprising and factory occupations that gave rise to the CIO.  The capitalists give nothing without force or the threat of it.

For free market politicians whether Democrats or Republicans and their Libertarian allies, a minimum wage is government interference and an infringement on their rights as owners of capital to use it as they see fit. “It’s wrong in principle for government to interfere in work contracts between consenting adults.”, Business Week’s Peter Coy points out in the February 17^th issue. Big business plunders the public coffers, use government and public funds to rescue the bankers, make laws that aid their profit taking but government placing a floor on wages is interference.

Coy sounds much like Marx who also points out that when two social forces with equal rights (consenting adults) meet in the market place, the worker who is free to sell or not sell her labor power and the capitalist free to buy it or not, the price agreed upon and the conditions of its use are determined by force. The capitalists as the ruling class not only have money but the state and all it’s repressive forces, the police, the jails, the military if need be, and a massive propaganda machine through their ownership of the means of communication. We have the ability to withdraw our labor power, to strike to increase the price we get for it and to force political concessions from them that codify the gains we achieve through this struggle between the classes, but “consenting adults” is hardly an accurate description of the relationship between labor and capital. They also keep an army of unemployed that will keep those of us working wary about withdrawing our labor.

While some sections of the 1% support a measly increase in the minimum wage, the multi-millionaire Nancy Pelosi for example, it is only because they fear the potential power of workers and are concerned that their more aggressive colleagues are a little overconfident, are not considering the extreme anger and hatred of the rich that lies beneath the surface of US society and the danger of it turning in to social unrest.

Two thirds of Americans support a minimum wage increase according to a Washington Post/ABC News Poll, so the mass media cannot ignore this issue, nor can the journals of capitalism that are directed at their own class like the Wall Street Journal. But the dominant argument they use against raising the minimum wage is that it will increase unemployment and lead to fewer opportunities for young people, teenagers especially because bosses will be unable to hire the new “expensive” workers. But in 2012, 76 percent of workers earning $7.25 an hour or less were aged 20 or older. They also appeal to workers’ concerns in another way claiming that increasing wages will automatically mean higher prices for us as consumers so what’s the point of raising wages.

Peter Coy, a prominent bourgeois economist goes in to the issue in detail in the BW article, “Fiscal conservatives and the libertarian wing of the Republican Party reflexively view any increase in the minimum wage as a job killer.”, he writes.  Well, we don’t want to “kill” jobs do we? Coy admits that the conservative argument is the more pragmatic one, a higher wage, “….steals jobs from the most vulnerable people—those who could get hired at $5 an hour, say, but not at $7.25 or $10.10.”  That seems to make sense, better a job than no job at all and it gives the impression that they care.

Coy obviously supports a minimal increase and offers some evidence to the contrary, that some studies show that jobs aren’t lost by a minimum wage, or that they are minimal and some businesses can pass the increase on to the consumer without “harming sales” What they all agree on, including Coy, is that an immediate doubling of the minimum wage to $15 an our is not realistic.  “To jump from $7.25 to $15 would be a long haul. That would in my view be a shock to the system.”, says one labor economist. It is out of  “The realm of experience so, anyone who talks about its effect is kind of making things up.” We have to be scientific about this you see, never mind what we need.

Coy does point out that some economists (and millions of workers no doubt) consider $15 an hour miserly.  I mean, I do, but I’m not an economist so I don’t count in their eyes, nor do the millions of workers who earn the minimum or close to it.  One study by MIT professor Amy Glasmeier claims that a “living wage” for a single parent household with two children in San Francisco should be $29.66 an hour. For a single parent with three children in Shakopee Minn it should be $33.28.  Mexican immigrant, Maricela Flores who lives in Shakopee in a trailer with her four children earns $8 an hour cleaning bathrooms at a department store.  Ms. Flores considers the $33.28 figure a “fantasy”.

There’s the power of the mass media, a wage that would actually mean a relatively decent existence, though modest one is considered a “fantasy”.  We have to overcome the obstacle in our own consciousness that what we need as human beings is “fantasy”.

It is important for us to read the serious journals of capitalism as it helps us understand how the

enemy thinks about the system they govern.  Their whole argument is based on convincing workers it’s against our best interests to raise wages or to have a higher minimum.  Peter Coy is a serious theoretician of capitalism.  He has put considerable thought in to his piece in Business Week.  But consider this: his article has about 2800 words.  But there is one important word that is a missing. It is a word that is as important to capitalists as life and death.  They will kill for it and do, they will allow people to die from lack of medicine for it or food, without it, their rule and their system dies.  They write about it constantly every minute of every day.  That word is profits.  As far as I can see that word is not mentioned once in Coy’s article.

The reason for this is that, intentionally or not, they obscure the fact that profits come from the worker in the process of production from surplus value for which the capitalist pays no wages, not by selling the product of labor above its value as they claim.  Their claims of job losses and price increases and other harmful effects higher wages will have for working people are not established facts.  Prices are not determined by wages, but by supply and demand. If the market allows the boss to raise prices they will raise prices, if the market will not bear these price increases then the boss eats it in profits. It is profits that are threatened by higher wages generally. In the 1990’s fast food joints were paying above minimum wage because labor was tight.  Perhaps there was increased demand that covered those raises perhaps not. If not, the bosses’ incomes are cut.

So any increase in wages, or in the wage we receive for what Marx called necessary labor time, cuts in to the surplus value and therefore the capitalists’ profits.  It was a crime for workers to form unions and collective organizations for the purpose of increasing wages. By organizing ourselves in to economic organizations and political ones that fight for our interests we shift the balance of power in our favor in this struggle between the classes over the sharing out of the wealth we create.

It cannot get any plainer than this comment from this representative of the 1%. He writes, “You see the problem. Social justice demands a minimum wage of more than $20 an hour. Economics won’t allow for one much higher than $10.”

What we need is a minimum wage of more than $20 an hour to live a relatively secure life under capitalism.  The capitalist mode of production produces more than enough wealth for us to do so, to feed the world, to house every human being on the planet and to provide everyone with health care, education etc.  This is social justice, basic humanity one would think.  But capitalists are not driven to produce for human need; they are not in the business of production in order to pay decent wages, or to build schools, hospitals and the infrastructure of society. These arise only as they help capitalists accumulate wealth. The economic laws of the capitalist system, what Coy calls “economics” does not allow for a minimum wage that can allow people a decent life, it is not possible.

So despite victories in the class struggle that improve our immediate well being, they are only temporary victories.  It is the struggle for collective democratic socialist ownership of the labor process and the wealth that it produces that has to be our goal.  There is no other way.