Federal Minimum Wage Campaign. Wages and Prices Are Not Organically Linked.

$15 an hour is poverty wages and will be more so by 2025

“The will of the capitalist is certainly to take as much as possible. What we have to do is not to talk about his will, but to enquire into his power, the limits of that power, and the character of those limits.” K Marx: Value Price and Profit

 

By Richard Mellor

Afscme Local 444, retired

Language and words are important. What is said, who says it and when matters. I have mentioned on more than one occasion my recollection of a news reporter’s question to an airline traveler delayed because of the strike of the air traffic controllers in 1980. He asked what it was like to be held hostage by the strikers. Isn’t that what lawyers call a “leading question”?

 

It was not an accident he asked that question. The mass media has a point of view. Trump’s talk of fake news is not totally wrong although he used the term as a cover for his personal gain. The truth is that mass media has a class bias. It is news as propaganda. The owners of the mass media are hostile to strikes as they are a form of mass terrorism as far as they are concerned; economic terrorism. They are opposed to unions in any form but have been forced through decades of struggle and sacrifice by working people to accept them. Their open, violent opposition to strikes and unions has been suppressed somewhat certainly to return at some point, but the propaganda war continues day in day out. The mass (or main stream) media is an organ that has at its core, the class view of the ruling elite and the capitalist mode of production. Its role is to influence mass consciousness in a way that protects their interests.

 

There is a propaganda war raging about the minimum wage right now. It is a war that has been waged for over a century or more.  We should remind ourselves that in response to the huge battles and a general strike for the eight-hour day culminating in May Day 1886, the capitalist press claimed the end of the world was upon us. Anarchy, poverty, the system collapsing. Along with this propaganda, they imprisoned, tortured and their hired thugs murdered socialists anarchists, trade unionists, anyone organizing for the eight hour day.

 

It’s a little different today and the mass media is far more penetrating and skillful. The first shot across the bow when the issue of a federal minimum wage of $15 an hour is raised is jobs. If we are to believe the mass media, it is against our self interest to raise wages because the capitalists will have no choice but to lay workers off or raise prices. They are so concerned about our welfare they warn us when we make silly demands that will hurt us like higher pay.

 

William McGurn is a regular at the Wall Street Journal and his column in yesterday’s Wall Street Journal warns of the tragic consequences of raising the minimum wage to $15. Look at what happened in Long Beach California he reminds the reader. Long Beach city council passed an ordinance that required the larger grocery chains to pay workers an extra $4 an hour as a reward for working during the pandemic. In response Kroger, a major supermarket chain, one of the world’s largest retailers according to McGurn, closed two supermarkets and laid off close to 200 workers. Krogers is owned mostly by capital management companies and holding companies like Warren Buffet's Berkshire Hathaway. These are the poor folk who laid off workers after a $4 an hour increase. 

 

Naturally, an official of the unionized workers blamed greed and “reckless capitalism run amok” Not much to say about that as capitalism is always restless and running amok is integral to it. It doesn’t explain much and help us as workers understand the process at work here.

 

So McGurn continues with the usual propaganda. It’s not greed or reckless capitalism, it’s those progressives on the council who are “reckless.”  “Thanks to their intervention….” McGurn argues, “…..instead of finding an extra $4 an hour in their paychecks, nearly 200 grocery workers will now have no paychecks at all unless they are transferred to another store or find another job.”

 

This is the lesson federal minimum wage campaigners need to learn arguing that the federal relief package, (Biden’s stimulus) should include the $15 federal wage minimum. It will do more harm than good, says McGurn.

 

It will do some harm, but where is the issue and that’s what McGurn is hiding from us. More on that in a. minute.

 

McGurn goes on to back up his claims that raising wages is harmful to workers with the data from the Congressional Budget Office. As you ponder over any data form the US Congress remind yourself that it is a political body dominated by lawyers and millionaires. The CBO data claims that raising the federal minimum to $15 by 2025 (its presently $7.25) will “lift 900,000 Americans out of poverty over the next four years”.  Good news.

 

But it would also put 1.4 million workers out of work says the CBO. Oh dear! I’m not very good at math but it looks like raising the minimum wage to $15 an hour which is still poverty wages in most of the US, especially California where I live, will increase unemployment immediately by 500,000.

 

McGurn says we can quibble over details but the point is that, ”..there are real costs that should not be denied”, and goes on to name even some Democrats who agree with him like Senator Joe Manchin of West Virginia who offers a much more “reasonable” amount like $11 for workers in his state. Likewise, another Republicrat, Senator Kyrsten Sinema of Arizona says that the stimulus bill which would contain the increase should be a “short term relief” and not be linked to a federal minimum wage increase. This presents a problem for these two because they are opposed to the $15 an hour increase and if it’s in the stimulus package they will be forced to vote that down to stop it.

 

That it’s in the stimulus package is an excuse. These two Democrats could join with Republicans in the Senate to kill Biden’s stimulus bill on the basis of opposition to the wage increase. This is the US Senate, a thoroughly undemocratic body functioning as it should, giving power to rural smaller states and undermining the electoral power of the working class.

 

It is a wonderful thing for Wall Street and US capitalism to have two political parties and the US working class not one.

 

Byron Donalds, a new Republican Rep. from Florida’s 19^th Congressional District makes the same arguments and, McGurn points out in order to give him some street cred, has a background in finance. Donalds says that the laws of economics are at work here and “…when you make it more expensive to hire workers, you price them out of the job market.”.  Raising the federal minimum wage to $15 an hour would be a “…disaster for our nation, especially amid economic hardship brought on by the global pandemic”. Donalds, speaking for the “American people”,  says that we are “tired of paying the bill of coastal politicians’ progressive wishlist.” Ouch! Insult S

Mcgurn explains that a wage raise doesn’t always lead to “..dramatic job losses.” There are other alternatives, business can make the consumer pay by raising prices, or “replacing employees with machines; or reducing hours.”.

 

So, why am I bothering with this? Firstly, I have to admit that as I am no longer in a union and active too much politically on the streets or in the workplace, writing is somewhat of a catharsis for me.

 

But the most important thing as that as workers we see behind the smoke screen and to do that all we really have to do is think about the real world as we live it.

 

There are a lot of things that are expensive for workers like getting our teeth fixed for example. Medical care and prescription life saving drugs is another example.  But the implication that if workers are too expensive they will not hire is false. Auto workers and manufacturing workers have been blamed for the factory closures and plants going overseas---American workers are too expensive. U.S. capitalists shift production to places like Bangladesh or China because they can hire a human being in a non union environment  for a lot less money and with fewer obstacles to profit taking like safety or breaks. U.S. workers' living standards are too high for US capitalists to make the required profits. The Post War Boom was an exception and the so-called American Dream that was never a dream for all has entered the history books.

 

McGurn doesn’t go in to any detail about why the giant grocery chain Kroger paid off workers in response to a pay increase. All of the alternatives to pay increases are laid at the feet of the worker as a worker or as a consumer.

 

Despite McGurn being a sharp guy, a philosopher, writer, world traveler, and Byron Donalds being somewhat of an economic expert working in banking and all, the reader will not find the word ”profit” or “profits” once in McGurn’s article.  Why is that? It’s because they don’t want us to consider their profits.

 

You see, wages and prices are not organically linked. A capitalist can raise prices whenever they choose. But if the market won’t bear that, if there is more supply than demand of a commodity, let’s say hamburger joints, the consumer will go somewhere else. This happened in the 1990’s boom when fast food franchises were forced to pay above the minimum wage as labor was tight. Workers received market driven wage increases.

 

When profits were at a 40 year high, the heads of organized labor even failed in a favorable climate to push for significant increases, the market was more generous. Let’s look at another example. Some time ago, I looked for a united flight from Oakland to NYC the cost from Oakland was more than from San Francisco to NYC. The same airline, the same unionized employees and wage rates as far as I know. The reason is that as the buyer I had more choices in SFO and the sellers have more competition and are forced to lower prices.

 

No, prices and wages are not organically linked. What the $4 raise at Kroger did was effect profits. In the case of the fast food increases mentioned above, the capitalist was forced to eat it in profits. It cut in to their income and they would prefer they cut in to ours as workers or as consumers.

 

When this happens or when a major chain like Kroger takes the decision it did in Long Beach, as an economic response, but also as a political one, a form of economic terrorism warning workers not to demand a wage we can live a decent life on or suffer the consequences, the power of labor nationally and internationally as well as our community organizations, has to be brought to bear. The employer has the right to hire labor and the worker has the right to withhold it. When opposing rights collide, force decides. The demand to open the books is a first response. If a socially necessary industry like a grocery outlet is not profitable we take it in to public ownership as the Welsh government did recently with rail transport. This opens a wider discussion on the public ownership of banks, the finance industry the commanding heights of the economy and how capital is allocated and where in society.

 

And when we consider profits, we must consider profits over decades and over time. Profits, which are the product of the unpaid labor power of the working class have been accumulated over time and reside in the mansions, private islands, yachts, jets, education of their children, as donations to their universities in their stock market portfolios and other business ventures of the small minority that decide where we live whether we have jobs or somewhere to live in this society. They also reside in the weapons of mass destruction that they produce to maintain this system of theirs.

 

Prior to reading Karl Marx’s views on this issue I would have said like so many of us do, that raising a wage from $7.50 to $15 would lead to a burger costing twice as much. Marx opposed this view a debate in the first International Working Men’s Association with a man named Weston in 1865. In response to huge strikes in Europe for higher wages, Weston argued what McGurn and the capitalist class argues today, that wage increases were of no use to us and that unions actually had a “harmful” effect. This is over 150 years ago. It’s interesting to note how Marx, one of the most demonized men in history introduced his to his audience, the views in the debate. He said of Weston:

“Another preliminary remark I have to make in regard to Citizen Weston. He has not only proposed to you, but has publicly defended, in the interest of the working class, as he thinks, opinions he knows to be most unpopular with the working class. Such an exhibition of moral courage all of us must highly honour.”

 

This debate has survived and is published under the title Wages Price and Profit or Value Price and Profit. The reader can read it online here The language in a 150 page document is a little different but I urge workers to read this piece and discuss it with others more familiar with it as it is an invaluable contribution to political economy and understand how capitalism works.

 

The main thing for us as workers is to not disregard what we feel in our gut and to think always about our self-interest as a class. Why is it that profits aren’t mentioned in an article in a respected bourgeois journal about wages and prices, that includes advice on the subject from bankers and men of finance?