Better pay would help spending, economy, country

Bill Knight column for Thurs., Fri., or Sat., April 17, 18 or 19

Despite news that U.S. employers last month added a seasonally adjusted 192,000 jobs, Americans still need jobs.

Not to be missed, however, is that U.S. workers also need decent jobs.

In Washington and Springfield, business-cozy politicians resist raising the minimum wage because they claim employers will cut jobs – despite research that shows that hasn’t happened after previous increases (the last one five years ago this summer).

Their “partners in crimes” – consider them politician-cozy business leaders – agree. So the National Federation of Independent Businesses and the U.S. Chamber of Commerce oppose improving people’s pay because it would increase expenses.
This is short-sighted. Better pay – whether minimum-wage workers or unionized employees – can boost morale and lead to better performance and less turnover.

Further, from employers’ perspective, better pay attracts more applicants for jobs, offering companies more choices for new hires.

A few independent-minded conservatives see the wisdom of helping workers.

For instance, conservative columnist Patrick Buchanan recently wrote, “The fact on the ground is that people who for whatever reason are consigned to work minimum wage jobs for part or most of their lives are not able to provide for their cost of living, especially if they are raising kids under those circumstances. If the minimum wage were increased, these people would be able to provide for their living without assistance from the government, and as a result have more dignity in their lives.”

Also, more enlightened business interests – from the U.S. Women’s Chamber of Commerce to private employers such as Costco – favor raising the minimum wage because they see the benefits to communities – like putting more money into people’s pockets. After all, unlike the tired refrain from many Republican national figures who claim the 1 percent are the “job creators,” the actual job creators are consumers. Employers hire workers when they have more demand for their products and services – sought by customers. When companies have fewer customers, they shed jobs. And people need money to become consumers – to spend (especially after 2008’s economic collapse, after which many Americans understandably scaled back debt, including credit-card purchases).

In Illinois, Republican gubernatorial candidate Bruce Rauner in January suggested cutting the minimum wage, saying, “I will advocate moving the Illinois minimum wage [$8.25 an hour] back to the national minimum wage [$7.25]. I think we’ve got to be competitive here in Illinois.”

Rauner, a multimillionaire businessman, later backtracked, but he’s often given the impression of favoring the elimination of most government regulations: Let the marketplace rule.

Indeed, many new jobs might be created if there were no minimum wage at all. If companies conspired to fix wages at, say, $5 an hour, expenses would drop and some people would have to take the jobs.
But is that smart?

Take it farther. If the GOP kills the Affordable Care Act – or, heck, eliminates health insurance and job benefits, period – and corporations operate without rules on the environment, trade, and occupational safety and health, and pay no taxes, some revenues might go up … for a while. But there’d also be far fewer customers.

Again, would that benefit the economy? The country?

The most recent Bureau of Labor Statistics (BLS) report on “Usual Weekly Earnings” shows the median, or midpoint, of earnings at the end of 2013, adjusted for inflation, was $334 in “constant dollars.” That corresponds to $337 at the end of 2004, meaning that the midpoint of weekly earnings in the United States has lost $3 in value in a decade.

Right now, most employers – from small businesses to multinational corporations – could pay workers better without cutting quality or jobs.

“Corporate profits now account for the largest percentage of the economy on record,” said economist Robert Reich, Secretary of Labor during the Clinton administration. “Large companies are sitting on more than $1.5 trillion in cash they don’t even know what to do with. Many are using their cash to buy back their own shares of stock – artificially increasing share value by reducing the number of shares traded on the market.”

A statewide or nationwide minimum wage hike would strengthen consumers’ buying power, which would translate into more commerce. But companies in strong financial situations are choosing not to improve pay. Again, that’s short sighted.

On the extreme side is promoting laissez faire capitalism, the cutthroat “free enterprise” that’s a step above labor as bonded slaves, and on the common-sense side is recognizing that if society needs more and better jobs, they’ll stem from consumers who themselves earn enough to buy what the economy makes.

[PICTURED: Cartoon by Barry Deutsch from underthemountainbunker.com]