I ran into an argument about whether the minimum wage should be raised in the United States and it got me thinking about the reasons behind the argument for raising it. To start, here is some of the debate:
One of the harshest realities of America’s slow economic recovery — and there are many — is the fact in spite of modest job growth, pay for workers is falling. Year over year, average inflation adjusted wages have dropped by 0.6 percent for all private sector employees. They’re down a full 1 percent for non-supervisors — your retail salespeople, your shop floor factory workers, your cashiers. In other words, even as the overall employment picture has improved in fits and starts, the working poor are getting poorer.
Some believe this is a sign of the recovery’s weakness, and today the National Employment Law Project used it as a rallying point to call for a higher minimum wage. According to their analysis, which is current through the beginning of 2011, while the bulk of job losses during the recession affected medium wage earners, such as paralegals and nurses, most of the hiring post-recession has been for low-paid service work. Middle class jobs, they argue, have been replaced with poverty wage jobs…
But here’s the alarming part. All of this might simply mean that the same forces that caused wages to stagnate before the recession will make them stagnate after the recession. It’s just another sign that income inequality is here to stay, unless something radical changes that will give working class families a larger slice of the pie. Will raising the minimum wage do that? It might help on the margins, certainly for the 3.8 million workers who earn it. (I’m not one of those who believes that a higher minimum wage actually kills jobs. This great, short Slate piece from 2004 explains why.) But the vast majority of American workers won’t see much benefit from it. Rather, fixing the wage problem means we need to think about the fundamental problems skewing income growth towards the top, from spiraling CEO pay to an inadequate education system.
Falling wages are taking us back to where we were before the recession. For many workers, that’s not a good place. And there aren’t any easy ways out of it.
Of course, arguments for raising the minimum wage often focus on the idea that it is not enough money to live on. Hence, calls for a living wage that is more closely tied to a more steady standard of living.
But I wonder if there isn’t a bigger issue at work here: the idea that low-paying jobs may not be worth having. In other words, people might be better off without a minimum wage job. The low-paying job may be helpful in securing a new job (you don’t want an unemployment gap in your resume) or moving up but too many of these low-paying jobs pay so little that employees may not be able to do the things they need to do to move up (move to a new area where jobs are more plentiful, own a reliable car to expand job prospects, enroll in classes, etc.). Additionally, a number of these jobs don’t really offer chances for advancement; if they do, it is limited to a small group of workers. So these workers can get trapped in a cycle of low-paying positions that meet some basic needs to survive but never provide the hope to do something better. This is reflected in books like Nickel and Dimed: it is hard enough to do the daily grind, let alone find some light at the end of the tunnel in terms of a better-paying job.
In this sense, making a small adjustment to the minimum wage wouldn’t seem to do much. It might offer a little more money but this is likely eroded quickly by inflation (past and future). What we then need is more jobs that provide a higher standard of living and give more employees the opportunity to move on and up to something better.
(I realize there is a lot more going on here. But I wanted to get at the idea that simply having a job isn’t a guarantee of having the chance to reach the American Dream. Being willing to work doesn’t necessarily guarantee a good outcome. This also reminds me of Katherine Newman’s book No Shame In My Game about the working poor who want to work but can’t access the jobs that would lead to success.)