FacebookTwitterGoogle+RedditEmail

America’s Miserly Minimum Wage Needs an Upgrade

by RALPH NADER

America’s highest-paid CEO last year, John Hammergren of McKesson Corp., received compensation of over $131 million. That is the equivalent of about $63,000 per hour, or $10,000 more than the annual median household income in the United States. Meanwhile, some of this country’s lowest-paid workers—those on minimum wage—made just $15,080 annually at $7.25 per hour. Mr. Hammergren had surpassed that amount by 9:15 a.m. on his first workday of the year.

It is long past time for minimum-wage workers to receive a raise. Had the federal minimum wage just kept pace with inflation since 1968, it would stand today at $10.67 per hour, not $7.25.

President Obama finally broke his four-year silence on this issue by calling for a minimum-wage increase in this year’s State of the Union address. But he advocated a federal rate of $9.00 per hour by 2016—well short of the $9.50 by 2011 he promised while campaigning in 2008, and far from catching up with 1968. Rep. Alan Grayson (D., Fla.) rightfully went a step further this month by introducing a bill to increase the minimum wage to $10.50 per hour.

Mr. Hammergren’s compensation represents just one example of corporate avarice. The top 100 highest-compensated American CEOs all made more than $15 million last year. Over the last 45 years, the minimum wage has lost nearly one-third of its inflation-adjusted value, while CEO compensation has skyrocketed 900%.

At a Senate Labor Committee hearing last month, Sen. Elizabeth Warren (D., Mass.) noted that had the minimum wage increased in proportion to worker productivity since 1960, it would stand today at $22 per hour.

Critics argue that increasing the minimum wage will harm the economy. In fact, when low-wage workers receive a wage increase, they spend that money back into the economy to pay for the necessities of life. In 2011, a Chicago Federal Reserve study showed that for every dollar increase in the hourly pay of a minimum-wage worker, the result was $2,800 in new consumer spending from that worker’s household over the year. Studies from the Economic Policy Institute indicate that a $10.50 hourly minimum wage would increase economic activity by at least $30 billion over each of the first two years and add 140,000 jobs.

Opponents claim that a $10.50 wage would burden consumers with price increases. Yet Costco starts its workers at $11.50 per hour plus benefits, which assures lower turnover and higher productivity. Andy Shallal, owner of the successful Busboys and Poets restaurant chain, starts his workers at $10.25 per hour.

The last refuge of critics is the oft-repeated refrain that raising wages might harm small businesses (which already have received 18 tax breaks under Mr. Obama). The reality is that, according to a report from the National Employment Law Project, two-thirds of low-wage workers are employed not by small businesses but by large, multinational and highly profitable corporations such as Wal-Mart  and McDonald’s.

The low wages provided by large, profitable corporations don’t harm only minimum-wage workers. They also harm taxpayers and many small-business owners who are already paying more than minimum wage in one simple way: through our taxes.

Corporations pay their workers such low wages that the workers can’t afford to buy the food, pay the rent, or get the health care they need. Consequently, these employees increasingly turn to the taxpayer-funded government safety net via food stamps, Medicaid, the earned income tax credit and housing-assistance programs. Taxpayers end up footing the bill for the unconscionably low wages paid by profitable corporations.

Wal-Mart, which grossed $318 billion in the U.S. last year, provides its workers with technical advice about how to apply for this public assistance. For responsible businesses to subsidize the low wages of their larger competitors is a complete perversion of capitalism.

Corporations like Wal-Mart have no problem making profits while paying the higher $10.25 minimum wage in Ontario, Canada, just across the border from Buffalo, N.Y. Australia’s minimum wage is almost $16 per hour. Of the 10 countries with minimum wages higher than America’s, eight have unemployment rates that are the same or even lower.

Poll after poll has shown overwhelming American support—70%—for increasing the minimum wage. All that is standing in the way is Congress. Thirty-nine House Republicans and 24 Republican senators voted to increase the minimum wage in 2007. The moral and economic reasons to increase the lagging minimum wage haven’t changed.

Do members of Congress want to serve the interests of their corporate pay masters? Or do they want to support a hard-pressed working class of 30 million Americans whose depreciating wages result in deprivations and tragedies? It’s time for our country to catch up to 1968 wages.

A version of this article appeared April 16, 2013, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: America’s Miserly Minimum Wage Needs an Upgrade.

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. Hopeless is also available in a Kindle edition.

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

March 23, 2017
Chip Gibbons
Crusader-in-Chief: the Strange Rehabilitation of George W. Bush
Michael J. Sainato
Cybersecurity Firm That Attributed DNC Hacks to Russia May Have Fabricated Russia Hacking in Ukraine
Chuck Collins
Underwater Nation: As the Rich Thrive, the Rest of Us Sink
CJ Hopkins
The United States of Cognitive Dissonance
Howard Lisnoff
BDS, Women’s Rights, Human Rights and the Failings of Security States
Mike Whitney
Will Washington Risk WW3 to Block an Emerging EU-Russia Superstate
John Wight
Martin McGuinness: Man of War who Fought for Peace in Ireland
Linn Washington Jr.
Ryancare Wreckage
Eileen Appelbaum
What We Learned From Just Two Pages of Trump’s Tax Returns
Mark Weisbrot
Ecuador’s Elections: Why National Sovereignty Matters
Thomas Knapp
It’s Time to End America’s Longest War
Chris Zinda
Aggregate Journalism at Salon
David Welsh
Bay Area Rallies Against Trump’s Muslim Ban II
March 22, 2017
Paul Street
Russiagate and the Democratic Party are for Chumps
Russell Mokhiber
Single-Payer, the Progressive Caucus and the Cuban Revolution
Gavin Lewis
McCarthyite Anti-Semitism Smears and Racism at the Guardian/Observer
Kathy Kelly
Reality and the U.S.-Made Famine in Yemen
Kim C. Domenico
Ending Our Secret Alliance with Victimhood: Toward an Adult Politics
L. Ali Khan
Profiling Islamophobes
Calvin Priest
May Day: Seattle Educators Moving Closer to Strike
David Swanson
Jimmy Breslin on How to Impeach Trump
Dave Lindorff
There Won’t Be Another Jimmy Breslin
Jonathan Latham
The Meaning of Life
Robert Fisk
Martin McGuinness: From “Super-Terrorist” to Super Statesman
Steve Horn
Architect of Federal Fracking Loophole May Head Trump Environmental Council
Binoy Kampmark
Grief, Loss and Losing a Father
Jim Tull
Will the Poor Always Be With Us?
Jesse Jackson
Trump’s “March Massacre” Budget
Joe Emersberger
Rafael Correa and the Future of Ecuador: a Response to James McEnteer
March 21, 2017
Reshmi Dutt-Ballerstadt
On Being the “Right Kind of Brown”
Kenneth Surin
God, Guns, Gays, Gummint: the Career of Rep. Bad Bob Goodlatte
David Rosen
Popular Insurgencies: Reshaping the Political Landscape
Ryan LaMothe
The Totalitarian Strain in American Democracy
Eric Sommer
The House Intelligence Committee: Evidence Not Required
Mike Hastie
My Lai Massacre, 49 Years Later
James McEnteer
An Era Ends in Ecuador: Forward or Back?
Evan Jones
Beyond the Pale
Stansfield Smith
First Two Months in Power: Hitler vs. Trump
Dulce Morales
A Movement for ‘Sanctuary Campuses’ Takes Shape
Pepe Escobar
Could Great Wall of Iron become New Silk Roadblock?
Olivia Alperstein
Trump Could Start a Nuclear War, Right Now
David Macaray
Norwegians Are the Happiest People on Earth
March 20, 2017
Michael Schwalbe
Tears of Solidarity
Patrick Cockburn
Brexit, Nationalism and the Damage Done
Peter Stone Brown
Chuck Berry: the First Poet of Rock and Roll
FacebookTwitterGoogle+RedditEmail