Higher wages mean fewer jobs. Says Who?

Source: Huff Post Business

By Richard Mellor
Afscme Local 444, retired

Andrew Pudzer is a saint.  Pudzer is the CEO at CKE restaurants that owns the Carl’s Junior and Red Burrito chains among others. As of November 2012 according to Wikipedia, CKE operates 893 domestic restaurants and its franchises operate 1,937 domestic and 492 international restaurants in the US and 27 other countries.

Pudzer wrote an Op-Ed piece for the Journal on June 10th titled “Why Young People Can’t Find Work”.   What a thoughtful guy. It’s not often you hear CEO’s express sympathy with the unemployed, especially the youth.

Mr. Pudzer moved me almost to tears in his recognition of the economic crisis and the effect it’s had on youth.  He points out that in the “…more than five years Mr. Obama has been in office, young people have been especially hard-hit by the slow and virtually jobless recovery.”. This is a real crisis for our youth for sure.  Pudzer goes even further, reminding the reader of the negative effects of denying young people the prospects of a “productive and rewarding working life.  “On a deeply human level…”, he writes, “ it’s profoundly sad”  “Profoundly sad”,  moving words indeed.

If only I could write such tender and caring phrases. Straight from the heart.

Pudzer backs up his points with some glaring statistics. 

In February the Bureau of Labor Statistics (BLS) recorded the lowest percentage of 16- to 19-year-olds working or actively looking for work (32.9%) since the bureau started tracking the data in 1948.

In August 2012, the 69.7% (labor participation rate for 20 to 24-year-olds) was the lowest since '73. The second-lowest (70%) came in March last year. This year, the third-lowest rate came in April (70.2%). May's rate was a still-miserable 71%.. Pudzer is aiming at the Obama Administration here.  Why would a Republican businessman be so concerned about jobs?

Never mind, I’ll read on—this is too good to be true having allies like this in corporate boardrooms.

After sharing with us some very disturbing numbers Pudzer asks: “Where are the entry level jobs?”  I am not quite sure of where we’re going here as “entry level” is a very obscure term.  Entry level to what?  A 24-year-old person is at first a young adult and often a parent and family provider. People work at “entry level” jobs their entire lives.

Pudzer correctly points to the very weak US economy. Five years of 2% average yearly GDP growth for example, “..simply doesn’t produce enough jobs to absorb the natural increase in the labor force…”  he says.  For the average person like me, a public sector worker who rose from the humble ranks of utility laborer to backhoe operator over 30 years, it’s hard for me to see the world in the same way. We need roads, education, transportation, and other services yet both political parties have either reduced wages in this area or cut jobs altogether. 

Government jobs have declined by 627,000 during the recovery, with 44 percent of those losses felt by teachers according to the National Employment Law Project

• Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.
• Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.
• Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.

So what’s happened, and what should happen from the capitalists point of view, is that relatively decent paying and mainly public sector union jobs, have been replaced by low waged service ones. Remember Rahm Emanuel, Obama’s friend and mayor of Chicago reminding his class that a good crisis should not go to waste. And indeed it hasn’t.  Incidentally, Emanuel, whose father was a member of an Israeli terrorist group also served as a volunteer in the misnamed Israeli Defense Force. He has two nationalities like many of us immigrants.

I’m thinking Pudzer is not such a saint after all. He has a bit of a different perspective on things I can see that as I read on.  Pudzer rails against states and municipalities that “have increased their minimum wage, thereby increasing the cost of employing inexperienced workers.”  Pudzer argues that “Minimum wage jobs have always been a gateway to better opportunities.”  I don’t think so.  Unions, affordable education, and favorable objective conditions provide better opportunities.

I am sure the reader realizes I tried to introduce a little humor here.  Pudzer is anything but an egalitarian, he is an exploitative bastard.  I remember the wonderful lyrics from Towne’s Van Zandt’s song, Tecumseh Valley:

She said she'd come
To look for work
She was not seeking favors
And for a dime a day
And a place to stay
She'd turn those hands to labor *

That’s the way workers think.  With all our faults we have a work ethic, a fair day’s pay for a fair day’s work.  The problem is that we cannot receive a fair days pay for a fair days work.  We cannot receive a payment from the capitalist equal to the value we produce. It is through the labor process (work) that wealth is created and only through this process.  We receive less in wages than the value our labor power produces. Wealth has its origins in the unpaid labor of the working class.

The capitalist does not mind that at all, that he or she exchanges less money for the use of a human being’s labor power over a period of time than the value that labor power produces. It is an unfair exchange yet for the capitalist it is the apex of civilization; it is freedom for them; an entire system that is based on coercion and violence.

“The bottom line on labor”, Pudzer tells us is the same as the bottom line with any commodity, “Make something less expensive and business will use more of it. Make something more expensive and business will use less of it.”

Pudzer goes on to explain the real reason young people can’t find work, human labor power is only one aspect of the labor process, capital in the form of money and machinery is another.  The owners of capital are refusing to invest it in this important process because the worker is demanding to high a price for the use of labor power.  The recent fast food struggles and the campaign for a $15 an hour minimum wage----still poverty wages but a huge gain for many of the lowest paid---- is the problem,  and the pressure this campaign is putting on local and state governments to legislate higher minimum wages for employees of companies with government contracts is not helping. 

Pudzer claims much like Carnegie and others did, that paying higher wages stifles incentive and hard work, universal laziness will afflict the entire working class.  Paying higher wages,”… diminishes the notion that ‘if you work hard and take responsibility, you can get ahead.’".

They don’t say that about CEO’s bankers or hedge fund managers. They say that they have to pay them higher to attract them. If hard work made you rich our mothers, fathers and grandparents would be millionaires. Black folks would be at the top of the list as their ancestors never received any wages at all for their work.

Source: Womenemployed.org

Paying higher wages creates “disincentive to hire them” says Pudzer which is true.  But it is that we have to address, not lowering wages. 

We must not be taken in by the New Populism of Elizabeth Warren or Robert Reich, two prominent representatives of the 1%.  Reich is a leading theoretician of the 1% and was a major figure in the Clinton Administration that pushed through NAFTA and threw working class women off welfare via the nefarious “Personal Responsibility and Work Opportunity Reconciliation Act,”  They are both  pro-market thinkers

What Reich and the “New Populists” are tapping in to is the fear of the middle classes and more sober sections of the bourgeois that if the inequality gap continues to rise their precious market economy may come crashing down, that increased political polarization as he puts it will threaten the system itself, threaten their ability to rule. “How much inequality can we have and still have capitalism?”, he asks in his movie "Inequality for All". In fact, Reich's support for a $15 minimum wage is more about putting a floor under the lowest paid jobs rather than getting back the buying power workers have lost after decades of Democratic and Republican assaults.

People don’t have jobs because capital is not investing in jobs as the profit is not there.  They don’t call it a “disincentive to work” when we go on strike in response to attacks on our wages and conditions.  They are on strike as the owners of capital.

We will never be secure, never eliminate poverty, never solve the environmental crisis etc. until we take ownership of capital in the form of the wealth we create through the labor process and the labor process itself. We will only be taking possession of our own product from those who (legally by their definition) stole it

And Andrew Pudzer?  Well, he deserves a job and a secure and productive life like everyone else but not at the expense of everyone else. The guy who wants to drive down the wages of workers so him and his friends can make more profit (money without working) earned a total compensation of $4,485,055 in 2012**

That’s what we’re up against.

*Townes Van Zandt Tecumseh Valley

** Forbes