Opposition to minimum wage hike is not about jobs but profits.

 Richard Mellor

Afscme Local 444, retired

The productivity of human labor power has created such immense wealth it’s staggering.  Take these couple of examples that I have at hand. Between 1980 and 1992 steel companies reduced the man hours necessary for the production of a ton of steel from 9.2 to 5. Meanwhile, in roughly the same period, 1982 to 1994 according to Business Week, corporate profits increased 166%, consumer prices by 75% and executive pay 514%.

Let’s look at the introduction of the shipping container and how it changed the world.  In the book, The Box, the author claims that one of the first container trips from New Jersey to Houston in 1956 lowered the cost of transporting the cargo by 97%, from $5.83 a ton to 15.8 cents a ton. Where did all this money go?

With the attacks on workers organizations and the increased exploitation and globalization of labor, a few individuals and families have accumulated massive wealth.  The WalMart heirs have more wealth than 90 million Americans for example.  Reports in 2012 claimed that as much as $32 trillion has been stashed in offshore accounts around the world in order to avoid paying taxes.  The taxes on this alone would end poverty never mind the accumulated wealth itself being the product of labor, stolen from workers in the labor process.

The abovementioned productivity had another effect, as the labor hours to produce a ton of steel were reduced by almost 50%, US manufacturing slashed 4 million jobs (1982 to 1994). They employed the same number of production workers they did in 1946 but produced approximately 5 times as many goods.*

There are all sorts of problems with this scenario of course, increased productivity and the introduction of new technology and labor saving devices does not benefit those that produce the wealth but primarily those that own and control the process that generates it. If such innovation benefited workers, the work-week would be slashed dramatically and all workers could receive more leisure time.

President Obama and the Democrats are using Labor Day (the day big business set up to undermine Mayday) to make statements about the need to raise the federal minimum wage which is presently $7.25 and hour.

The problem with this issue is that we have the millionaires and billionaires in two corporate parties discussing what wage a worker, in this case a low waged worker, needs to live a decent life.  We know one can’t live on $7.25 an hour; one can only starve on it. The president and the Democrats are flirting with $10.10 an hour.  They are supported in this effort by their allies atop organized labor.

Raising the federal minimum wage "would help around 28 million Americans from all walks of life pay the bills, provide for their kids, and spend that money at local businesses," he said. "And that grows the economy for everyone."  Obama said last Saturday during his weekly radio address.

No one should oppose any increase in pay even an inadequate one, but $10.10 an hour would do little to help the low waged escape a life of poverty and uncertainty and they would most likely still work those other one or two jobs most workers need to keep their heads above water.

An attempt to raise the minimum wage to $10.10 already failed in the Senate this year. This is not surprising as the US Congress is populated by representatives of big business.  All the legislators represent the capitalist class. There are differences between them of course, but not when it comes to the bottom line and that is profits.

But if you read what they say, profits are never mentioned. The Congressional Budget Office provides information for the politicians to use in their efforts to keep wages low or raises to a minimum.  A CBO report claims an increase to $10.10 an hour would mean the elimination of 500,000 jobs.  How so?  It can only be so if we let them. This is designed to scare workers and deter us from trying to raise wages and to con people in to thinking they actually care about working people’s lives, jobs, jobs, jobs. House speaker John Boehner has used this argument. He calls for massive cuts to entitlement programs unless the entitled are the banks.  He had no problem supporting the TARP program. Frat boy lawyer, Lamar Alexander, the Senator from Tennessee opposes an increase as well saying in a speech earlier this year that

--> "The American people want it to be easier to find a good-paying job." Some hypocritical nasty bastards these characters.

AFl-CIO president Richard Trumka, echoing the more liberal wing of the capitalist class claims raising the minimum wage will “..Help the economy………It will help put some upward pressure on wages just above the minimum wage and help create additional demand."

His comments too are aimed at reassuring the bosses that their interests will not be significantly harmed by the jump to $10.10 an hour and their long term interests can be served by agreeing to it. The pressure from below is such that to not address the poverty levels and inequality in society would increase the possibility of the anger in society bursting to the surface leading to a much more costly scenario. 

If workers win higher wages through strike action or forcing big business politicians to legislate it in the form of a minimum wage, and if that increase cannot be passed on in the form of higher prices, then it comes out of the bosses’ profits.  This is why they oppose wage increases. Profits in turn arise from the surplus value stolen from workers in the labor process as we are paid less value in the form of wages than the value of the product of our labor. That is why jobs are important to the bosses, not because they care about workers but because it is the labor process that is the source of their wealth.

Elizabeth warren talked of the minimum wage and how it would be $22 an hour had it kept up with productivity.   "If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour," she said at a Senate hearing on labor last March. She asked Dr. Arindrajit Dube, an expert on the subject, “…with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn't go to the worker."

It’s interesting to note that all the “experts” in bourgeois society have fancy letters after or before their names. I once attended a forum on poverty here in Oakland. There were plenty of poor people in the audience but none of them on the panel.  The reason they don’t put the victims of poverty eg poor people, on panels like this is they are the genuine experts and they’ll tell us what they need. Instead, Senate Committees like the one Warren addressed offers an opportunity for a bunch of millionaires to discuss poor people’s problems. Experts not.

So what did Warren do with her findings about productivity?  Nothing. What can she do?  The only way we can reverse and eventually stop the assault of capital on labor is to build a united working class offensive of our own, independent organizationally and politically from the Democratic Party. Warren knows where that might lead. It is inevitable in struggle that broader conclusions like the nature of the system would arise.  What is capitalism, how does it work and what is the alternative?

The only reason Democrats like Reich, Warren and Obama are talking about the need to raise the minimum wage is the pressure from the recipients of it in the home health care, fast food, retail and service industries. The SEIU campaign for $15 as well as the $15 NOW campaign spearheaded by Socialist Alternative and Kshama Sawant that is rapidly becoming a $15 at some point campaign, also have to be undermined and coopted by the Democratic Party with the help of its allies that head the organized labor movement..  This is the traditional treacherous role this party plays.

This writer and others on this blog have supported both the above campaigns despite their weaknesses and the inadequacy of a $15 minimum in an economy that requires at least $25.  There is clearly considerable grass root support for these campaigns and it would be counterproductive to split the movement over these differences.

As I have referenced before.  A great read on the subject of wages, prices and their relationship to profits, read Marx’s Value Price and Profit.

* These figures are from BusinessWeek, "Reinventing America " special 1992 edition.